Jan 11, 2012
No Christmas discounts pays off for SuperGroup
Jan 11, 2012
SuperGroup, the British company behind the Superdry fashion brand, said a sharp rise in underlying sales growth at stores in the run-up to the festive period vindicated its decision not to discount before Christmas.
The company, whose clothes are a favourite of celebrities such as David Beckham, Leonardo DiCaprio and Zac Efron, said on Wednesday sales of its trademark T-shirts, hooded tops, check shirts and jogging bottoms rose 5.8 percent at stores open over a year in the nine weeks to Jan. 1.
That compared with a like-for-like sales fall of 3.3 percent in the second quarter when trading was hamstrung by the botched implementation of a warehouse IT system upgrade which sparked a profit warning.
"I'm happy with the way that we go about life and view retail; it seems to work, as the numbers show," Chief Executive Julian Dunkerton said of the firm's promotional policy.
He said other retailers might regret unprecedented levels of pre-Christmas discounting as it damaged their pricing power and the strength of their brands.
"I think a lot of people will regret going into sales too early," he told Reuters.
"Your Christmas shopper is a different shopper and they come out once a year with a different mentality. You've got a great chance to capture that mood and that moment, and by discounting you're losing it," he said.
"Christmas is all about retail, and against a very strong backdrop for last year we still delivered 9.3 percent like-for-like (growth) in December."
SuperGroup's total sales over the nine-week period rose 22 percent to 79 million pounds ($122 million), with retail sales up 28 percent at 66 million pounds and wholesale sales down 4 percent at 13 million pounds, reflecting the different phasing of supplier deliveries.
SuperGroup was one of 2010's most successful stock market flotations. After listing at 500 pence 22 months ago, its shares rocketed to a high of 1,899 pence in February last year after a string of stellar sales figures.
But a poorly received fourth-quarter trading statement in May and October's profit alert prompted a dramatic reversal.
Its shares were up 3 percent at 567.5 pence at 0930 GMT, valuing the business at about 455 million pounds.
"One update does not warrant a re-rating, and we remain cautious against an increasingly challenging consumer backdrop," said Collins Stewart analyst Wayne Brown.
With British shoppers' disposable incomes squeezed by rising prices, muted wages growth and government austerity measures, store chains generally had a tough Christmas, using early sales to attract customers. They do not expect 2012 to be much better.
Dunkerton is, however, relaxed about 2012 prospects.
"The macro environment is a challenge but it was a challenge this Christmas, and I think if you've got the right product at the right price, you're OK," he said. "Money will always be spent on products. Life goes on."
SuperGroup trades from over 70 UK stores and over 100 international licensed, franchised and owned stores.
It plans to open 20 new UK stores and 50 international stores a year, sees scope for over 400 franchised stores in Europe and is in talks over deals to enter India and China.
Separately on Wednesday British grocer Sainsbury beat Christmas sales forecasts, while baker Greggs and home shopping firm N Brown posted sales increases.
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