Superdry disclosed that the trading performance for FY24, spanning the 26-week period ending 28 October 2023, has been “significantly below management expectations.”
The company attributed this to the challenging external environment, despite making progress on strategic priorities and implementing an ongoing program to “recapitalise” the balance sheet.
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Superdry, therefore, expects the profits for the year to reflect the weaker trading seen to date.
Superdry reported that the cost efficiency programme is on track, with the initial £35m ($44.31m) of cost savings expected to be achieved within the year. Additionally, the company is actively evaluating opportunities to further reduce the fixed cost base of the business.
Operational and strategic update
- Inventory reduction programme on track as clearance of aged stock has continued.
- Further action taken to support the balance sheet with funds received of £28.3m, net of transaction costs and taxation, for IP joint venture and disposal of assets in the South Asian region to partners Reliance Brands.
- Secondary lending facility of up to £25m agreed with Hilco Capital Limited, providing the Group with improved liquidity to help the implementation of the turnaround plan and cost efficiency programme.
- Cash management continues to be key focus for the Group.
- Continue to reshape store estate with strategic closures and regearing of rental leases supported by programmes to optimise store space and improve profitability.
The British retailer highlighted that the ongoing turnaround programme is designed to create an operating model more suited to the needs of the business over the longer-term and return Superdry to profitability.
FY24 trading update
Retail was down 13.1% YoY, with Superdry noting that stores and ecommerce sales were impacted by the warmer weather, as well as a later start to the retailer’s end-of-summer sale.
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By GlobalDataEcommerce sales were also said to be impacted by a profit-focused reduction in spend on digital marketing.
Wholesale saw a similar trend, witnessing a YoY decline of 41.1%. Superdry attributed this decline partially to the company’s withdrawal from the US wholesale operation, as well as timing differences and underperformance within this channel.
Superdry mentioned that more seasonal weather seen recently in the UK and Europe, along with Superdry’s longstanding strength in outerwear, has led to a “pick-up” in sales. However, the fashion retailer added that despite some more encouraging trends, sales in the six weeks since the half-year are still down around 7% on a like-for-like basis.
The British fashion retailer noted that H1 2024 was characterised by a “challenging consumer retail market” and the “abnormally mild autumn” resulted in a delayed uptake of its AW23 collection.
Julian Dunkerton, founder and chief executive officer, believes the unseasonal weather through the early autumn led to a delayed uptake of its Autumn/Winter range and impacted sales in the first half of the year.
Dunkerton continued: “Whilst we have seen modest signs of improvement through the recent spell of colder weather, current trading has remained challenging, and this is reflected in the weaker than expected business performance. The operational progress we have made in the first half has been more encouraging with the IP sale for the South Asian region and strong progress on our cost efficiency programme.”
