Superdry has another strong year, hails e-tail, US and China growth

By

Sandra Halliday

Published
May 11, 2017

Did Superdry owner Supergroup have a good year? You know the answer. The casualwear specialist seems unstoppable at the moment as a look at the latest set of figures, released on Thursday morning, shows.

Group revenues in the 12 months to April 29 stormed ahead 27.2% to £750.6m. Now, one-third of that was due to positive currency effects after the pound’s plunge following the Brexit vote. But even with that third factored-out, it’s still a strong result. And it expects full-year pre-tax profit of £86m to £87m, which is in line with earlier guidance and up from £73.5m a year ago.

Of course new store space would have made a major impact too, but was the increase all about new store openings? No. Comparable sales rose 12.7% overall, helped by a 35% sales rise in the e-tail channel. And the good performance seems to be continuing. In its Retail operation alone during Q4, comparable sales rose a healthy 9.4%. That’s lower than last year and lower than Q3, but given the tough times on the UK high street at present, it still leaves much of the market trailing and shows that this firm is able to get event he most cautious shoppers through it doors.

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One way the company is prospering is through its commitment to wholesale. While many brands have retreated from this channel and favour the higher-margin appeal of their own retail stores, wholesaling remains crucial to Supergroup.

It said its Wholesale unit advanced at a powerful rate last year with a full-year surge of 42.9%. The company said that this growth reflected the the benefit from its renewed focus on this channel “with improved service levels driving sales with existing customers and franchise expansion and product innovation introducing new customers to the brand.”

But even with a brand as powerful as Superdry, every results announcement contains some negatives. The company said that, as previously flagged, gross margin performance across its sales channels was broadly flat year-on-year during the second half but the full year will see a fall.  The adverse impact of foreign exchange and the strength of Wholesale growth, being faster than Retail, mean group level gross margins are expected to decline on a full-year basis in the range of 120 bps to 140 bps.

Yet for the most part, Thursday’s report was an upbeat one. The company ended the fiscal year with 555 Superdry stores (up from 475 a year ago) and  passed the milestone of operating 1 million sq ft of owned trading space during the second half.
 
The group's development markets of North America and China, have continued to perform in line with their respective plans. In the US, the benefit of continued strong e-commerce growth, improving comp store performances and an encouraging new store performance has led to a break-even position being achieved for FY17, in line with guidance.
 
Was CEO Euan Sutherland bullish on what was an undeniably impressive set of figures? Yes, up to a point. But he kept it relatively low-key. ”FY17 has seen another good year of sales and profit growth,” he said. “This has been achieved by improving our product ranges and introducing new categories to excite, inspire and maintain the brand's relevance while, in parallel, investing in our development markets and improving our infrastructure. With a clear strategy and a number of long term opportunities to establish Superdry as a global lifestyle brand we remain confident in the continued delivery of sustainable revenue and profit growth."