Winter is coming: Superdry looks to colder months after cautious first half

Sebastian McCarthy
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Today’s results come a little under a month after the British fashion group suffered a share price kicking on the back of a profit warning (Source: Getty)

Fresh from issuing a profit warning last month, British fashion group Superdry reiterated its weather woes this morning after saying that it had yet to see a sustained period of normal conditions, despite enjoying a second-quarter bump in sales.

The FTSE 250 firm saw shares fall by over six per cent in early trading despite brand revenues for the half-year to mid-October jumping 7.4 per cent to £850m when compared with the same period last year.

Group revenues climbed just 3.1 per cent to £414.6m, though, as co-founder Julian Dunkerton is rumoured to be waiting in the wings, hoping to persuade shareholders to help him return to the business.

Sales climbed 11.2 per cent to £545.1m in the second fiscal quarter of the year, its trading statement also showed, rising 1.3 per cent from the first three months.

Today’s update come a little under a month since the British fashion group's share price suffered on the back of a profit warning.

While this morning's message struck a similar tone to the firm’s warning in October, it reiterated concerns that the prolonged summer weather has undermined sales in its core European and US markets.

The firm will be hoping for cold weather to bolster demand for jumpers and jackets, which account for roughly 45 per cent of the firm’s annual sales.

Superdry chief executive Euan Sutherland said it would take up to 18 months for Superdry to see the benefits from a product shake-up that is currently underway.

"In the meantime we are well prepared for peak trading and the team remains highly focused on the delivery of sales growth and further efficiencies in the remainder of the year,” he said.

"Superdry is a strong brand with significant growth potential, based not only on product diversification and innovation, but also on our category extension and geographic expansion opportunities and our ability to leverage our multi-channel operating model to serve customers in whichever way suits them best."

Julian Dunkerton, the co-founder of Superdry who stepped down as boss in 2014 and is now reportedly seeking a return to the fold, said: "This is yet more bad news for shareholders; not just me but the pension funds and individual investors who backed me when we built and floated the company. We can turn it around, but we have to act now. The strategy is the problem and today’s statement from Superdry makes that clear, yet again."

"The management team remains hell-bent on their strategy, publicly supported by the Chairman; but the numbers and the market warnings speak volumes. It is very clear that the company needs to change strategic direction; I have a clear and simple plan to correct the problems, and I have been explaining my plan to shareholders over the last couple of weeks. This company and brand has such a great opportunity – we must grasp it now."

Kate Heseltine, analyst at Edison Investment Research, said: “Since the start of the year the shares have declined by 55 per cent and it seems that institutional investors are not the only ones left feeling disillusioned. Julian Dunkerton, Superdry’s co-founder and largest shareholder, has recently made his views on the strategic direction of the business widely known and is rumoured to be getting investors on side to take back the reins.”

Heseltine added: “With that in mind, and as the weather has turned seasonably colder, much is riding on the performance in the second half, which accounts for 70-75 per cent of full year profit. Today’s outlook statement has cautiously indicated that sales in some key markets have returned to a more normal level for this time of year in the past week.”