However, due to continued cost growth, underlying operating profit for the period was down 31.6 percent on the prior year, and the operating profit margin was down 340 bps to 5.8 percent. Reported operating profit increased 73.2 percent compared with the same period last year. Retail sales grew by 12.5 percent in the first half of the financial year with like-for-like growth down 4.1 percent on the comparable period last year compared to over 8.1 percent in 2013.
On the first half trading update, Euan Sutherland, Chief Executive Officer, commented, “Supergroup is an exciting business with a strong brand and significant growth opportunities which, during this period, has suffered from widely publicised external factors. Additionally, I have identified that there are some parts of our operations that we can improve. I am reviewing every aspect of the business, including the execution of our strategy, cost management and capital allocation and will report our conclusions in the spring. We are well prepared for the important peak season and remain on track to deliver profits within guidance.”
Underlying operating profit was broadly flat although, as a percentage of sales, declined by 130 bps which reflected an improvement in the gross profit margin driven by the international businesses, offset by increases in costs. The Wholesale division's revenue growth has been impacted by a number of factors. First, the Group has undertaken less trade clearance activity compared to last year; excluding these sales, year-on-year growth would have been around 5 percent. Wholesale revenue in the rest of the world has continued to deliver significant growth but momentum has not been maintained in Europe. European markets have been impacted by a disappointing spring/summer season and suffered from the weather patterns outlined above throughout the autumn.
Whilst the gross margin has been up on the year during the first half, with the additional clearance activity that will take place in the balance of the year the Group is revising its full year gross margin percentage guidance to broadly flat year-on-year from the 25 bps accretion previously given. The first half's sales under-performance will adversely affect the full year operating margin by around 150 bps.
Considerable progress was made with the international growth strategy, with owned space in mainland Europe growing 42 percent in the first half, including a flagship store in Munich. At the end of October, the group sold through 549 Superdry-branded stores and concessions spanning 47 countries.