Superdry sees a recovery in revenues as trading in stores improves


Superdry PLC (LSE:SDRY) announced a return to revenue growth in the 18 weeks to August 28 but stores are still feeling the impact of subdued activity on the high street.

The fashion retailer forecast a recovery in revenue for the current year on the back of improved trading in its stores, strong e-commerce growth and a modest improvement in wholesale.

However, Superdry said it expects costs to increase by GBP35mln-GBP45mln due to the return of UK business rates and the end of furlough support and it therefore does not expect a change in market expectation for profits for full-year 2022.

Revenue increased by 1.9% year-on-year in the 18 weeks to August 28 as Coronavirus (COVID-19)-related restrictions eased. Store sales rebounded 76% in the UK and 169% in the US, although this was partially offset by a 10% fall in the EU where stores were closed at the start of the period.

Ecommerce sales in the first 18 weeks of 2022 dropped 34.4% against “extraordinary growth” in the prior year, Superdry said.

The return to full-price trading resulted in a less pronounced uplift during the sale period but did drive online gross margin up 10.5 percentage points year-on-year, it said.

Wholesale revenues grew 12.7% year-on-year in the 18-week period and are expected to continue recovering as the retailer’s partners sell through carried forward stock and see their markets return to normality.

The retailer predicted that revenue will exceed historic peak levels in the medium term, boosted by opportunities in e-commerce and wholesale.

Margins are forecast to increase across all channels as the company transitions towards a “full price stance”, supported by further mix benefits from the switch back into stores.

Superdry said it expects “disciplined full price trading, continuing rent renegotiations and the operating leverage from cost savings” to return the business to historic operating profit margins.

The group said it remains committed to the high street and recently announced it is closing its Regent Street store in London and moving to a higher footfall location on Oxford Street.

The current trading announcement accompanied Superdry’s earnings release for the year to April 24 2021, which showed a significant impact on performance from the loss of 39% of store days due to COVID-19 restrictions.

Total revenue of GBP556.1mln dropped by 21.1% from the previous year, while gross margin fell by 90 percentage points to 52.7%.

Adjusted pretax losses narrowed to GBP12.6mln from GBP41.8mln, helped by cost saving measures and government support.

The company is not paying a full-year dividend.

Deferred rent totalled GBP40mln, net working capital inflow was GBP22.9mln and net cash was up 6.0% at GBP38.9mln in the year.

“Like most brands with a physical presence, our performance over the past year has been impacted by the significant disruption of COVID-19, but I am really proud of how the business has stepped up and returned to revenue growth in Q4. Store and Wholesale revenues are recovering well despite continued subdued footfall, and Ecommerce margin is benefitting from our return to a full price stance,” said chief executive Julian Dunkerton.

“I’m in no doubt that we’re turning the corner and there’s a lot to be excited about. Trading has been encouraging since the reopening of our stores, and we’ll take a big step forward as a brand with the opening of our global flagship store in Oxford Street later in the autumn. Whilst a lot remains uncertain, I’m looking ahead to 2022 and beyond with real confidence as we deliver our reset.”


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