Superdry is midway through a turnaround plan aimed at reigniting brand appeal

Superdry is midway through a turnaround plan aimed at reigniting brand appeal

Shares in Superdry fell 3.6% this morning as half-year profits sank as the group continues work on a turnaround plan.

Underlying profit before tax fell 98.4% to GBP0.2m (US$0.26m) for the 26 weeks ending 26 October, while revenue fell 11% to GBP369.1m.

The group is midway through a turnaround plan, committing to move the business away from a "reliance on constant promotions" and reignite brand appeal.

It said the revenue fall reflected an expected year of reset as it addresses a number of legacy issues across the business.

However, retail sales decline moderated through the first half, with second-quarter store revenue stronger than first quarter as key initiatives were implemented. The company said it has experienced an "encouraging early start to third-quarter peak trading with its strongest online Black Friday day ever, but a substantial amount of peak trading period still to come.

It also added it has made progress in strengthening and stabilising its leadership team.

Julian Dunkerton, founder and CEO, said: "At this halfway point in our financial year, I am pleased with the progress we have made to comprehensively reset Superdry.  We're doing this through our product and brand, our physical and digital retail operations and a renewed focus on the retailing basics.

"We are only eight months into a process that will take two to three years, but I have great confidence in the strength of our new executive leadership team. I am also pleased with the trajectory of performance we have seen from Q1 to Q2 and subsequently into our peak trading period, which gave us our biggest online trading day ever.  However, we remain cautious about the challenging market conditions over the peak trading period".

Commenting on the results, James Yacoub, retail analyst at GlobalData, says the results have yet to show much concrete evidence of improvements so far.

"In order to prove Superdry's strategy is the right one, the retailer needs to demonstrate positive revenue results in the long term. Superdry continues to slip behind competitors who have far more refined propositions and are more in tune with their customers' needs.

"As Superdry attempts to reignite its brand appeal, it should focus on updating its style credentials and also highlight its high-quality materials. It must now find a way to futureproof the brand – positive steps have been taken in hiring ex-Nike executive Phil Dickenson as creative director who can breathe new life into the business and potentially help restore Superdry's long lost "cool factor". This will, however, be no easy task and will require loosening the purse strings on the marketing budget – an effective marketing campaign is much needed to help transform Superdry's brand perception.''