UK fashion retailer Superdry has revealed plans to take back full control of its China business, ending its four-year joint venture with local partner Trendy International.
The company says the move will leave Superdry “free to determine how it will trade in China in the future”. It followed a review of the brand’s long-term business plan for its operations in China, and an “amicable agreement” with Trendy.
The joint venture was formed in 2016 and has 25 owned and 41 franchise stores in China. The owned retail stores are due to close by the end of August, while the franchise partners in China will end their relationships by the end of the year.
Superdry says the decision is part of the company’s transformation plan for the group, putting in place the right infrastructure and business models in each of its core markets, and has been accelerated by the impact of Covid-19. As it “resets” the brand, Superdry says it will assess the right operating model for China to maintain a presence in what remains “a large and attractive market”.
“I believe that China represents a huge opportunity for Superdry in the longer term,” says CEO Julian Dunkerton. “As the way people are shopping there changes, it makes sense for us to shift our focus to the growth channels of online and wholesale. Combined with the improvements we are making to our product ranges, I am confident that this is the right time for us to take back full control of our brand in China and to re-position our operations in the region to deliver profitable future growth for Superdry.”
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Superdry anticipates that about GBP6m (US$7.5m) in total, of which GBP3m was recognised at HY20, will be written off in its FY20 accounts as a result. The company is not expecting to incur further costs of closure or need to inject additional material cash to support the wind-up of operations.
In its fourth-quarter, Superdry saw sales slump 36.9% to GBP118.5m, while full-year sales came in at GBP705.5m (US$761.7m) versus GBP871.7m a year earlier.
