Superdry swings to full-year loss as wholesale struggles persist

Superdry swung to a loss in its most recent full-year report despite reporting a small increase in sales, as a strong retail performance was offset by weaker wholesale trading.

The British fashion retailer swung to a loss of 148.1 million pounds in the 12 months to July 29, compared to a profit of 22.4 million pounds the prior year, amid its ongoing turnaround efforts.

The company made a pre-tax loss of 78.5 million pounds, compared to a profit of 17.6 million pounds a year earlier.

That came as group revenue edged up 2.1 percent to 622.5 million pounds.

Superdry hailed “robust” growth of 14.7 percent through its retail channel thanks to “strong peak holiday sales” and the continued recovery of key markets like the US and UK following the end of the pandemic.

On a less bright note, the company’s wholesale business posted a 19.1 percent drop in revenue as it continued to be impacted by “a more cautious outlook from partners”.

CEO Julian Dunkerton said: “This has been a difficult year for the business and the market conditions have been extremely challenging, especially in wholesale.

“We’ve looked closely at how we operate and have taken decisive actions to improve our position, rebuild liquidity, and recapitalise our balance sheet, through careful preservation of cash and a re-engineered cost base.”

He noted the company has made “strides” in the planned “revitalisation” of its wholesale business, despite the channel remaining “very challenging”.

First-quarter trading

Looking at more recent trading, group revenue was down 18.4 percent year-on-year, with wholesale down 50.3 percent, e-commerce down 12.6 percent, retail down 6.6. percent, and stores down 3.7 percent.

However, the company said that its overall performance was “broadly” in line with expectations, with full-price trading and its cost efficiency programme driving margin improvement.

It added: “Wholesale production and distribution has long lead times, and it will take some time for the impact of the new leadership in this area and the reversion to an agency model in some major European markets, to be seen in the sales performance.”

Superdry said the consumer retail market remains “challenging and unpredictable”.

It said extreme weather events across the UK and Europe have negatively impacted its Spring Summer collection, while its new Autumn Winter collection “is selling better this early in the season, than usual”.

Looking ahead at FY24, the company said it doesn’t expect to see “significant revenue growth” as it focuses on cost savings and margin improvement.

“The 35 million pound cost savings programme announced earlier in the year should be fully realised during FY24,” it added.