Superdry boss dismisses 'going concern' fears
Superdry’s CEO has dismissed fears over its future following the inclusion of a “going concern” warning in its latest set of results this week.
Co-founder Julian Dunkerton said there’s “no way this company is heading towards any financial difficulty”, despite the warning that was linked to patchy consumer sentiment and ongoing lockdowns in the UK and abroad.
He was also quoted by This Is Money saying: “Do you think the world is going to get better or worse in the next 12months, compared to the 12 we have just had? I think it is going to get better. But from an accounting point of view we have to say we don't know.”
And he added that he expects “huge pent-up demand” in stores once the pandemic is finally over, saying that “shopping is leisure and as such I think it will come back very quickly”.
Dunkerton said the warning had to be included in the stock exchange filing as it was a technical accounting issue. But the company is in a good position cash-wise and has no structural debt.
Newspaper headlines on Wednesday had focused heavily on the going concern warning as they reported another set of sales falls for the business in the latest six months. The firm's shares fell sharply as a result.
This week’s accounts had also included a statement that the company believes it can operate within its borrowing facilities and covenants for a year at least.
But the company isn’t yet out of the woods as it pushes through its recovery plan during the weakest retail conditions in decades.
Retail analyst Gemma Boothroyd at GlobalData said the company’s over-reliance on its store network “meant sales were significantly hampered in the lead up to Christmas, as more temporary store closures across the UK and Europe forced store revenue to decline 52.1%”.
And she highlighted that growth in its e-sales also slowed in the latest six-month period, rising only 13.2% compared to almost 50% in the first half.
She said this suggested that Superdry “failed to drive new loungewear sales following initial customer investment in this category earlier in the year, despite it reporting record levels of engagement for its [AW20] campaigns”.
But she thinks some actions it’s taking will help it. The firm’s new strategy “to target and attract a younger demographic is imperative for its long-term survival,” she said. An increased focus on social media and influencer-led campaigns “will also be integral for Superdry, with the retailer recently partnering with Brazilian footballer Neymar Jr for an organic underwear campaign to bolster interest from younger consumers”.
She also said its emphasis on sustainability, with a target of 100% organic cotton in products by 2030, “will help to support its vision and justify an elevated price”.
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