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Superdry Issues Profit Warning After Founder's Return

The warning comes just over a month after Julian Dunkerton returned to lead a turnaround.
Source: @Superdry
By
  • Bloomberg

CHELTENHAM, United Kingdom — Superdry Plc plunged after warning that profit will miss analysts' estimates, little more than a month after the founder of the British fashion chain returned to lead a turnaround.

The retailer said that it expects full-year underlying pretax profit below market expectations of £54 million to £59 million ($70 million to $77 million) as it blamed weak e-commerce and wholesale sales.

The shares fell as much as 8.4 percent early Thursday in London and have lost more than three-quarters of their value since the beginning of 2018.

The warning comes after founder Julian Dunkerton returned as interim chief executive following a high-profile campaign in which he criticised the previous management team led by Euan Sutherland for a lack of innovation and creative flair. Dunkerton said his focus has been on stabilising the business since then.

Dunkerton started out selling clothes at a market stall in Cheltenham, England, in 1985 before teaming up with designer James Holder to create the Superdry brand. The retailer is best known for its outerwear emblazoned with Japanese characters.

The retailer’s performance has declined in the past year and a half, with Dunkerton criticising a decision to expand the range beyond the coats and jackets it’s known for. The largest shareholder in Superdry with a stake of just over 18%, he left the business last year but campaigned to be re-elected to the board following the decline in performance.

Fewer Discounts

Online sales fell in the fourth quarter, Superdry said, after it reduced discounts and promotional activity. The company said it’s moving to increase the range of goods sold via e-commerce at full price, while boosting the density of stock in stores. It plans to introduce 500 new products in the coming six months.

“The opportunity is for Superdry to once again reinvent itself, under the leadership of co-founder and majority shareholder, and find relevance amongst a younger consumer group, against the backdrop of a crowded apparel marketplace,” RBC analyst Piral Dadhania said in a note, while flagging “execution risk” over the next two years.

By Deirdre Hipwell; editors:Eric Pfanner and John Lauerman.

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