E-commerce is key to SuperGroup with yearly 25 percent increase

ANALYSIS_ British retail firm SuperGroup [IRDX RSGR] reported Thursday online sales up by more than a quarter in its latest financial year. The parent group to the SuperDry brand attributed the 26.7 percent increase to its mobile and tablet sites launch, together with blooming e-commerce.

“We have delivered a solid performance over the past year, with profits up 19 percent, whilst managing the transition to our new distribution centre and the implementation of the merchandising management system,” Julian Dunkerton, chief executive, said.

Dunkerton added that “With a strong pipeline of new stores, particularly in mainland Europe, we are well positioned for further profitable growth in the year ahead. The strength of the Superdry brand and the investment we have made in our business leaves me confident in our ability to implement and deliver the growth strategy.”

Tablet and mobile sites to fight against brick & mortar's gloom

SuperGroup has fought against a weaker flow of visitors to its brick & mortar stores by rolling out tablet and mobile sites and would continue to invest in the “long-term opportunity” of ecommerce as it looks to generate “significant growth” online.

The company said improvements in website traffic and to the conversion rate – which rose from 1.9 percent to 2 percent, were driven by service improvements including free delivery and returns and a later cut-off time for next-day delivery.

As witnessed by the British fashion retailer, the growth came despite moving away from promotional activity such as discounts and vouchers. Less customers visited the physical stores as “as mobile became a more important channel for the customer, but the recent release of new mobile and tablet sites across most of the group’s international websites puts the business in a strong position to return to historical growth rates.”

Online sales for the group were up by 26.7 percent in the year to April 26. Likewise, total group revenue grew by 19.6 percent to 430.9 million pounds, well ahead last year's 285.5 million pounds. Also increases for like-for-like sales (+ 3.2 percent) and underlying pre-tax profits (+18.8 percent to 62 million pounds).

On the downside, bottom-line pre-tax profits fell to 45.2 million pounds from the 51.8 million achieved pounds a year ago.

Kate Calvert, analysts with Investec, outlined their views in a note to investors, saying that “with 2014 having been a year of infrastructure investment, we expect the operational benefits to start being felt in 2015. We see material growth opportunities not only to maximise UK profitability but also driving the online business and rolling out in Europe.”

Average order values rose by 8.1 percent to 78.90 pounds, as revealed by the company, driven by international growth. SuperGroup operates 18 international websites sites in 15 countries, featuring localised payment, content and local currency pricing.

Angela González Rodríguez