Superdry has tough Q3 as mild weather means sales chill
Superdry is being closely watched at present as the former high-flyer has found it tough going in recent periods. And with its co-founder plotting a comeback (one that the company is resisting), it’s certainly a headline-grabber. But the headlines on Thursday were about its Q3 trading update. And the story was? More of the same on the sales front.
The company reported better wholesale ops but “subdued” store and e-tail sales, plus “ongoing legacy product issues and continued unseasonably warm weather throughout the quarter.”
That wasn’t what people wanted to hear as Superdry really does need to start turning itself around after too many quarters in which it has admitted that the weather was a problem, that retail was tough and that the product wasn’t quite right.
But CEO Euan Sutherland said in his comments that he was “pleased with the early progress being made with our transformation programme, designed to reset the business and deliver a return to higher levels of growth and profitability.”
So let’s look at the detail. Its performance in the 13 weeks to January 26 was “in line with market expectations,” it told us as its “transformation plan gathers pace.”
But those expectations hadn’t been that lofty and in numbers, it meant total global brand revenue up 5.4% to £479.6m on the back of higher sales through wholesale partners, but group revenue down 1.5% to £269.3m.
Wholesale rose a healthy 12.7% to £73.5m but e-tail was down 0.7% to £69m (in an environment in which most omnichannel retailers manage to record sales rises in this area) and store revenue fell 8.5% to £126.8m. And that was despite the company operating from 2.6% more selling space.
As mentioned, the company said its retail woes were “impacted by subdued store and e-commerce sales driven by ongoing legacy product issues and continued unseasonably warm weather throughout the quarter.”
The e-commerce performance was “further impacted by a lower number of owned site promotions in some territories.”
And what about its transformation plan “gathering pace”? That’s partly about its comprehensive programme to deliver £50m+ in gross cost savings by FY22 being on target, and also about new hires with Phil Dickinson joining as Creative Director and Lucy Maitland-Walker as Merchandising Director last month.
But the company also said that the wider programme “has been intensified in response to the challenges faced” and “builds on the underlying strengths of the brand and the operational capability which has been established over the last four years. “
A full update will be provided in late March but for now we know that the product diversification and innovation programme launched last summer is continuing “at pace”. The early results of the programme will be seen for AW19 and in the launch of kidswear, “with further impact coming through” but not until the launch of the SS20 offer.
We were also told that “the programme of work to evolve the brand is under way, driving improvements in our brand architecture which can be flowed through product, stores and online and through our relationships with wholesale and franchise partners.”
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