UK retailer Superdry has warned it will miss its 2020 targets as it has come up against “unprecedented challenges” from the coronavirus (Covid-19) outbreak.
The brand said on 10 January it expects underlying profit before tax to be in the range of zero to GBP10m (US$11.8m) but today (18 March) noted guidance provided on that date would not be met. It did not provide an updated target.
The retailer has shut 78 of its stores across Europe which account for the majority of its European store estate and contribute about 40% of weekly sales forecasts.
Stores in the UK and US remain largely open but footfall has been significantly impacted, reducing on average about 25% week on week, as governments and customers take increasing measures to contain the spread of the virus. Superdry said these “key markets” represent about 50% and 10% of weekly sales forecasts respectively.
“Given the performance to date, we do not expect the decline in sales from our retail stores to be fully mitigated by sales through our e-commerce channel, which remains fully open for business. Whilst we are also pursuing cost-saving measures across the business, we do not expect these to be sufficient to offset the sales decline,” said the group.
CEO Julian Dunkerton added the company is taking “mitigating action” wherever possible but the situation is “very fluid and uncertain”.
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By GlobalData“We are working to put in place additional financing to secure our recovery. We also welcome the measures announced by the chancellor yesterday to support UK businesses. The safety of our staff and customers remains our number one priority and we continue to take all appropriate action in line with local government advice. Together, we’re going to make our way through this unprecedented challenge, and I’m confident we can reset the brand and deliver on our transformation plans.”
Commenting on the announcement, Kate Ormrod, lead retail analyst at GlobalData said: “Given Superdry’s profit warning in early January following poor festive trading, today’s announcement that it will miss its revised FY2019/20 profit target was inevitable given the severe challenges posed by the unforgiving coronavirus outbreak, especially with its exposure across Europe. Central to its transformation plan is a focus on full price, though with fashion retailers already discounting on new season stock to entice spending, Superdry will be under greater pressure to change its approach.
“As clothing and footwear retailers with compelling propositions are struggling, the pandemic will cause untold damage to Superdry’s recovery. Indeed, it states that it cannot make up the store sales shortfall via the online channel; however, we expect many of its contemporaries in the clothing sector to find themselves in the same position.”
Earlier today, Spanish retailer Inditex which owns the Zara brand, said its sales had also been affected by the outbreak.
