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May 7, 2020
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Superdry sales plummet but e-tail and womenswear are strong

May 7, 2020

In its pre-close full-year trading statement on Thursday, under-pressure retailer Superdry talked of a hefty sales fall as its performance continues to be battered by Covid-19. And the firm is pursuing financing options. But it had good news too with e-tail surging and its women’s offer doing well — womenswear actually accounted for around half of sales in the latest period. And it believes three-quarters of its franchised stores will be open by the end of the month.


The struggling fashion retailer, which has seen its co-founder returning to the helm to lead its turnaround, said all of its stores are currently shut across the UK, Europe and US, with most concessions also closed.

At the time of its last trading statement on March 18, only 78 out of its 241 location had been out of action, but with a total shutdown, it’s no surprise that its Q4 revenue performance was down 36.9%. And that’s doubly disappointing given that prior to the Covid-19 outbreak, it was “encouraged by underlying performance, with revenue improving to only be down 1% year-on-year” in the six weeks to March 7.

But the pandemic meant that the year ending late April (FY20) saw group revenue down 19.1% to £705.5 million. Covid-19 wasn’t the only issue as sales were also dented due to the firm having moved towards a full-price trading stance and away from persistent discounting. That had some benefits during the period and the full-price mix improved 12 ppts over the full year. But the pandemic was the really big problem in Q4, of course.

Store revenue was down 22.9% in FY20, as a consequence of the return to that full-price trading stance. This was particularly noticeable over the peak trading period, reflected in the full-price sales mix increasing by 16 ppts to 69% over the year. Store revenue also plunged 57% in Q4. Prior to the outbreak of Covid-19, store revenue declines had averaged 12.1% year-on-year.

E-commerce revenues fell 8.2% in the year but rose 6.8% in Q4, having been subject to “similar headwinds” as in its retail store estate in the first three quarters. But e-tail is obviously on the up. The e-tail performance in the six weeks to March 7 “materially improved”, growing 18.8% year-on-year until the outbreak of Covid-19, which is encouraging.

Wholesale revenues were down 20.1% in the year and 35.8% in Q4, “with the expected recovery of timing impacts hampered by Covid-19, resulting in suppressed demand and customers' inability to receive SS20 stock prior to the year-end, though shipments are now resuming as lockdown measures ease and franchise stores begin reopening”.

Only 22% of its franchise stores are currently trading. However, it expects 75% of the entire franchise estate to have reopened by the end of May. It has also reconfirmed the majority of its AW20 forward order book.


While much of the trading update contained grim news, the e-tail performance was clearly a major positive, especially as it had started to see strong growth before the pandemic ’s effects were felt. And apart from an initial drop in demand as lockdowns began, it said e-commerce revenues have “subsequently performed well, likely benefitting from channel shift following the full closure of our retail store estate”. Weekly e-sales are up 100% year-on-year over the last four weeks, “also benefitting from improved product and imagery, re-energised social media campaigns, and an extended end-of-season sale”.

In fact, e-commerce revenues in the most recent period were around £3.7 million per week, offsetting around a third of the lost store sales.  

But the total effects of the pandemic are clearly denting cash flow. The firm said it had £39.8 million as of May 5, although that was down from £47 million on March 18. To conserve cash, 88% of its staff are furloughed and the executive directors and other board members are taking a 25% pay cut for a “minimum” of three months. It said its lenders are supportive and its looking at financing options.

As far as its supply chain is concerned, it added that it’s been “working collaboratively and with the support of our longstanding supply base, [and] we have extended payment terms, increased discounts and substantially rebalanced and rescheduled our stock intake, reducing the number of units of future buys by 20%”.

The majority of its three-month rent deferrals requested, worth over £20m, have been agreed as well. 

CEO Julian Dunkerton said:As with all retailers, the Covid-19 pandemic has caused major disruption to our business operations and supply chain. I am pleased with the accelerating shift in sales to online, and we've seen a particularly good performance from our women's ranges which, for the first time ever, are accounting for around half our sales. Clearly however, the closure of all our stores has had a major impact. We are taking all practical steps to preserve cash, looking carefully at all areas of the business and working to secure additional liquidity and financial flexibility.”

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