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Superdry disappoints on stores but forecasts big profits

superdryBritish fashion brand Superdry has disappointed the market with weak store sales over the Christmas holidays but has nevertheless said it expects double-digit profit growth in fiscal 18.

The UK-listed business said that store sales for the 16 weeks ended 7 January (Q4) declined by six per cent compared to the prior corresponding period, despite a 13.5 per cent increase in retail space versus last year.

Sales were impacted by weather in the UK over the holidays but underlying full year profit before tax is still expected to be between £96.5 – £97.5 million, a double-digit increase on last year.

Also reporting sales for the 52-weeks ended 28 April (FY18), Superdry said that global revenue was up 16 per cent to £872 million, with a weaker 3.4 per cent increase in store sales being offset by a 29.6 per cent increase in wholesale and a 25.8 per cent increase in e-commerce.

Stores are still Superdry’s largest breadwinner though, nearly accounting for more revenue than wholesale and ecommerce combined at £372.8 million.

Average retail space (in square feet) increased by 14.8 per cent in the year as the business continued its global expansion, including in Australia where it has more than a dozen stores.

Superdry is also investing in the US and China, with localised e-commerce launched in America during the year.

Chief executive Euan Sutherland said the business delivered another good year of profit growth and was well positioned with its multi-channel retail offer moving forward.

“We benefit from a clear brand positioning, an agile infrastructure that serves our global consumers through a truly multi-channel proposition and increasing operational excellence,” he said.

Speaking to Inside Retail last year after his first trip Down Under, Sutherland said that Superdry is particularly pleased about its presence in Australia and prospects for its multi-channel model here.

“We always want to have a multi-channel approach to the market and I think Australia lends itself to that. The brand feels like it’s good so far and we’d like to see slightly bigger stores as we go into the next phase so we can show more of our ranges,” he said.

The business expects to generate “high single digit statutory revenue growth” in fiscal 19, led by its capital light e-commerce and wholesale divisions while managing ongoing challenges in its store network.

 

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