Superdry‘s half year results for FY23 (the 26-week period from 1 May 2022 to 29 October 2022) shows revenue increased 3.6% year-on-year from GBP277.2m (US$342.9m) in H122 to GBP287.2m in H123.
Similarly, group revenue was up 4.5% for the Christmas trading period (30 October to 31 December) compared to the same period in 2021, however Superdry’s founder and CEO Julian Dunkerton is keen to remain cautious for the remainder of the year.
He says: “Whilst we did trade well through November and December, the outlook for the remainder of the year is uncertain and as a result, we are moderating our profit outlook to broadly break even. We don’t expect market conditions to become easier any time soon, but with a new financing package in place and the brand in great health, we approach the year ahead with optimism.”
Superdry’s half year FY23 results
Superdry’s retail channels experienced a 9.5% growth in the half-year FY23 results due to a strong return to physical retail, but it admits e-commerce growth of 1.6% was more modest due to customers returning to shopping in stores. Superdry explains this was offset by both the slower rate of buy in wholesale, given some stock overhang, which continued to be adversely affected by stock overhangs from Covid, and a later dispatch profile for AW22 product.
Dunkerton remains positive about retail trading, and states: “The Superdry brand has real momentum and I’m delighted by how our retail trading continues to strengthen. We’ve done this against a difficult macroeconomic backdrop by delivering well-designed, affordable, and responsibly sourced products which have resonated well with customers.”
However, he is quick to point out that despite the underlying brand recovery, profits in the first half fell short of expectations. He says this was mainly due to the underperformance of wholesale: “We reorganised our team and our approach to support our wholesale partners and expect to see their confidence return following the retail success of AW22.”
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Gross margin contracted by 3.1%pts in the first half, which Superdry attributes to its full-price stance during a period of rising costs being offset by the delayed wholesale price increases and additional stock clearance through the wholesale channel.
Adjusted loss before tax fell to -GBP13.6m from -GBP2.8m in H122 and statutory loss before tax was -GBP17.7m, a GBP21.7m decrease from a profit of GBP4.0m in H122.
Superdry’s Christmas trading results
Superdry explains its group revenue going up by 4.5% in the nine-week Christmas period is thanks to its physical store trading continuing to recover and this was offset by a material reduction in its wholesale dispatches.
Retail revenue (stores and ecommerce combined) grew by almost a quarter (24.9%), and Superdry believes this reflects a strong recovery in stores and more seasonal weather re-igniting the demand for its outerwear. Stores revenue was 18.8% and ecommerce revenue was 33.4%.
Superdry was also pleased with its “strategic and well-executed Black Friday” and end-of-season sale.
It says it saw a recovery in its store sales beyond pre-Covid levels during the holiday trading period and the Black Friday event was its first major promotion in nine months and kickstarted its successful Christmas trading after the unseasonal weather in October.
Plus, the post-Christmas sale cleared stock at attractive rates for customers – on better margins than alternative clearance channels, which helped to reduce its excess inventory, whilst having a small impact on gross margin.
Superdry admits wholesale has proved more challenging with revenue down 18% year-to-date, in part driven by the impact of shipment timings, some of which will reverse in the second half. However, there is still a Covid-related
confidence lag in wholesale, which it expects to close once its partners see the success of its AW221 range via its own channels.
Superdry’s revised FY23 outlook
Superdry has amended its adjusted profit before tax guidance to broadly
break even (previously GBP10m – GBP20m), due to the underperformance of its wholesale division and its current margin run-rates.
Superdry highlights that the global macroeconomic outlook remains challenging. It says it has gained confidence from its recent robust retail performance and the strong demand for its brand across all geographies and platforms.
Superdry explains: “We believe that our honest approach to high quality products for a great price has resonated well with consumers under pressure and we can see that reflected in our sales numbers. The more recent trading performance through the holiday period supports our view that the brand is resonating with consumers and continues to strengthen.”
The retailer continues that it is mindful of the challenges facing the consumer in 2023 and remains very cautious about the potential for a soft spring and says it is taking action to seek costs savings initiatives to support its performance.
In October 2022, Superdry reported a full year return to profit following a decline in 2021 due to Covid, however it maintained the business needs to be run prudently given the current challenges facing retail and a threat of global recession in 2023.
Exclusive analyst comment
GlobalData apparel analyst Pippa Stephens tells Just Style exclusively that despite having invested considerably in its turnaround plan over the past few years, with hopes to revamp its image and regain desirability, Superdry is still far from recovering close to pre-pandemic levels, with group revenue for H1 FY2022/23 down 22.2% on H1 FY2019/20.
She says: “Though it has pivoted to offering more sportswear and athleisure, the prominent branding on many of its products can be off-putting for consumers who are becoming increasingly brand loyal to sports players like NIKE and adidas, so should make this more subtle to retain shoppers. Its premium prices may also hinder it during the cost-of-living crisis, so it should focus on its quality and versatility in marketing communications to help consumers realise its value for money.”