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Saturday 22 September 2018

Superdry misses profit target amid falling sales and multimillion-pound charge

The retailer blamed the Beast from the East weather front for a drop in sales.

Superdry's co-founder stepped down from the board at the end of March (PA)
Superdry's co-founder stepped down from the board at the end of March (PA)

By Helen Cahill, Press Association City Reporter

Superdry will miss its profit target for the year after it was hit by bad weather, declining margins and a multimillion-pound impairment charge on a flagship store.

The retailer previously said its maximum full-year profit could be £100.6 million, but said on Thursday that profits may now be as low as £96.5 million.

In the final quarter, Superdry’s store sales fell by 6% to £86.1 million. The retailer said bricks and mortar outlets “remained under pressure” and that revenues during the period were hit by the Beast from the East.

The retailer’s profits have also been knocked by a £7.2 million impairment charge on its flagship store in Berlin, and margins have declined year-on-year due to the growth of its wholesale business, alongside clearance sales.

Following the gloomy update, Superdry’s share price fell by more than 11%.

Liberum analyst Adam Tomlinson said the hit to in-store sales represented “sequential declines” throughout the year, and that traders would not react well given that rival Next had upgraded its profit forecast by £12 million.

We remain focused on the growth opportunities ahead and confident in the quality of sustainable earnings growth we can deliver over the long term. Euan Sutherland

“The asset write downs in Berlin, a key growth market, is unwelcome, and more modest top-line and margins in the 2019 financial year will come as a negative surprise, especially on a day when Next have reported surprisingly strong numbers,” he said.

For the year ended April 28, Superdry’s total revenue grew by 22.1%, rising from £1.3 billion to £1.6 billion.

Euan Sutherland, Superdry’s chief executive, said: “While the consumer environment remains challenging, we are confident that Superdry’s reputation for quality, design detail and strong value for money, underpinned by our continued investment in the business, leaves us well placed.

“We remain focused on the growth opportunities ahead and confident in the quality of sustainable earnings growth we can deliver over the long term.”

The results come after Superdry’s co-founder stepped away from the business.

Julian Dunkerton left his director position as of March 31, with creative teams stepping in to take over his product and brand work.

He transferred a block of ordinary shares worth up to £1.2 million to sea and biodiversity protection charity The Blue Marine Foundation by way of a personal donation.

Press Association

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