SuperGroup to enter China as FY profit climbs
- To enter China through JV with Trendy Int'l
- FY pre-tax profit up 2%
- Gross margin up 120 bps
- Sales grow 12.9%
SuperGroup said in May it was looking for a business partner to enter China
Superdry brand owner SuperGroup has announced plans to enter the Chinese market through a joint-venture as it revealed an 2% increase in full-year earnings.
SuperGroup signed the joint venture agreement with fashion and lifestyle retail firm Trendy International Group, as it announced an extensive pipeline of new stores in for the European market.
The company had said in May it was looking for a business partner to help it enter China, but has not revealed any further details of the deal.
In a trading update for the year ended 25 April, the company revealed underlying profit before tax up 2% to GBP63.2m (US$97.3m).
Group revenue climbed 12.9% to GBP486.6m, while gross margin was up 120 basis points to 60.9%.
Retail revenue grew 17%, while it recorded like-for-like sales growth of 4.8%. Wholesale revenue increased 4.9%.
Chief executive Euan Sutherland said SuperGroup made good progress in the second half.
"The past year has seen substantial progress in building Superdry globally with continued expansion of our owned retail presence in Europe and the buy-back of the US license. The joint venture in China with Trendy International Group, together with an extensive pipeline of new stores in our targeted European markets and continued momentum in e-commerce, provides confidence of continued long-term growth."
The retailer said it has maintained the sale momentum achieved in the second half, with total retail revenue for the first ten weeks of fiscal 2016 increasing by 34.5% year-on-year, with retail like-for-like sales growth of 20.3%.
The performance, it said, is against weak comparatives last year and falls within the group's lowest volume quarter.
"With strengthening comparatives in the balance of the year, we currently expect to deliver underlying profit in FY16 within the range of analyst expectations," it said.
Investec analyst Kate Calvert, noted: "We believe SuperGroup’s global growth opportunities remain undervalued. It is an early stage roll-out story with potential to double its UK & European owned store base, plus franchise growth opportunities and longer-term upside from the US & now China. Also, we believe there is a material opportunity to improve UK profitability."
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