Lockdowns hit Superdry sales again, losses widen, but e-tail is strong
Superdry’s first-half sales fall was almost exactly equivalent to the percentage of trading days that it lost in its directly operated stores through lockdowns globally, the company disclosed on Tuesday.
The six months up to October 24 last year were clearly not a happy time for the recovering business as its total revenues fell 23.4% and it completely lost 23% of its owned store trading days due to enforced temporary shutdowns.
Those lost store trading days translated into a 44.8% drop in physical store sales. It was fortunate that e-commerce partially offset that with the six-month online performance up 49.8% year-on-year. And although that couldn't fully compensate, it meant that online accounted for 50% of retail revenue in the first half compared to just 27% a year earlier. Wholesale fell by 29.2% in the period.
It also gave no guidance for the full year and flagged that “a material uncertainty exists and may cast significant doubt on the group's ability to continue as a going concern”, although it added that its liquidity position remains strong.
The tough times have continued into the start of the second half (H2) with Superdry adding that the 11 weeks to January 9 have seen the revenue drop growing to 27.2%, with store sales down 52.1%, e-commerce up 13.2% and wholesale down 23%.
As the company relies more and more on e-commerce, it’s encouraging that within the 13.2% increase, its owned sites pulled their weight and actually rose 25.7%. The lower rate of customer returns also helped the bottom line here and Superdry said that “as a consequence of protecting our core and current season product through disciplined pricing strategies”, it saw “an improvement in both gross profit and contribution year on year” in H2 so far.
Its full-price focus may have dented Black Friday promotional period sales, especially with third parties, but it’s good news that the firm has been able to avoid being excessively promotional during such a difficult period. And it said any declines “were offset by strong pre-Christmas trading, particularly on our owned sites, across early November and December”.
There was some good news on recent wholesale too. While the 23% drop looks bad and was affected by “more cautious AW20 forward orders given the backdrop of Covid-19”, these declines were “partially offset by in-season orders” that were up 29%, driven by online wholesale customers.
Moving away from the most recent 11 weeks and focusing back on the first half, the 23.4% total revenues drop meant a fall to £282.7 million from £369.1 million a year ago, while the gross margin fell sharply to 51.7% from 56.3%. The company made a wider underlying loss before tax of £10.6 million (a year ago that loss was £2.3 million) and when exceptional items are excluded from the underlying results, the loss was 336.8% bigger than last year’s H1 at £8.3 million. Meanwhile its pre-tax loss was 350% deeper at £18.9 million.
So, not exactly a great period for the company, but the problems were clearly caused by lockdowns as the Covid crisis continued to hurt the business’s recovery plan.
Superdry has been through some turbulent times in recent years with a steadily declining performance, the ousting of its leadership team and the return of co-founder Julian Dunkerton to the helm. He’s leading a turnaround drive while also navigating the issues caused by global pandemic.
Yet despite all the problems, it highlighted its “continued momentum with the brand reset” as the AW20 range saw key marketing campaigns that drove “record levels of engagement”. And it said sustainability is “increasingly embedded” in its operations with 38% of AW20 revenues from organic cotton, recyclable and low-impact material product, and 100% of AW20 padded outerwear jackets using recycled materials.
Dunkerton balanced caution with optimism im his summing up fo H1 and the start of H2 and said: “While revenue and underlying profit have been impacted by the external conditions, the brand has continued to focus on the reset, however, with over 70% of stores currently closed and having to shut a significant number over peak, it will take time to see the benefits of our hard work flow through to the results.
“We are making great progress with our influencer-led, digital marketing strategy, enabling us to better target new and existing customers. I am particularly excited about our recently announced partnership with Neymar Jr, a globally recognised sports star with over 143m worldwide social media followers.
“With Silvana Bonello joining our team as Chief Operating Officer, we are well on the way to having the right leadership team in place to see us through the current difficult environment and return the brand to long-term, sustainable growth once the pandemic recedes.”
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