Superdry brand owner SuperGroup has booked a 25.2% jump in first-half half, benefitting from continued strong growth across all channels, and said it expects full-year earnings to be in line with market expectations.
Global brand revenue surged to GBP756.3m (US$990.2m) in the 26-week period to 28 October, while reported group revenues increased by 20.4% in the half to GBP402m, including a benefit of about GBP12m from the impact of foreign exchange, the majority of which fell in the first quarter.
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Wholesales revenue continued to grow strongly, up 34.1%, while total retail revenues increased by 12.8% year-on-year, led by e-commerce sales that grew by 31.6%, and included like-for-like revenue growth of 6.3%.
Looking ahead, SuperGroup said that gross margin is expected to decline year-on-year by around 170 basis points, primarily reflecting the strong participation of wholesale sales. It added, as previously guided, gross margins will also be impacted by input inflation not passed on to consumers and investments made to reduce the overall level of inventory, partially offset by not repeating promotional mechanics trialled in 2016.
Despite this, the company is anticipating underlying full-year profit before tax to be in line with market expectations, and half-year profit, after distribution centre migration costs and development market investment, in the range of GBP25m – GBP26m.
“We have delivered another strong performance in this half, further demonstrating the unique advantages and attractiveness of Superdry as a global digital brand,” said CEO Euan Sutherland. “Our growth has further diversified the brand, both geographically and across channels, which serves to insulate the business from trading conditions in any single market.”
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By GlobalDataIn September, SuperGroup revealed it is to rebrand as Superdry Plc amid an update on its business transformation that now includes plans to roll out a series of corporate responsibility goals.
SuperGroup to rebrand as Superdry
Speaking during a two day Capital Markets update at the time, Sutherland said changing the name of the group to Superdry is an “important step” in reflecting the company’s focus on developing the Superdry brand globally and digitally.
SuperGroup says it is currently putting in place the changes necessary for this step and expects the name change to take effect during the first quarter of 2018.
“Our focus is on executing against the clear growth opportunities we have identified,” adds Sutherland. “We have a clear brand positioning, a disruptive multi-channel approach and a growing culture of operational excellence. The performance in this half underlines our confidence in both the strength of the brand we are building and the quality of sustainable financial performance we can deliver.”
Eleanor Parr, retail analyst at GlobalData, notes although growth has slowed year-on-year, Supergroup’s quality credentials have enabled the retailer to once again announce impressive double-digit growth within the “challenging” UK clothing market, which is only forecast to grow 1.9% this year.
She adds the retailer’s 2015 turnaround strategy, which included adapting its range to appeal to older consumers and expanding its global reach both online and offline, is clearly working, while its focus on sportswear that has attracted consumers buying into the popular athleisure trend, shows no signs of waning.
Meanwhile, although the group expects margin to fall by 170 basis points, it continues to benefit from wholesaling as a way to increase its customer and brand reach.
“Moreover, Superdry stated that margin will continue to take a hit as it has opted to absorb inflation in the market rather than pass it onto consumers – a wise decision as increasing its already mid-market/premium prices may alienate younger or less affluent shoppers,” Parr adds.
