Superdry swings to loss in first half amid 'reset'

Superdry said on Thursday that it swung to a loss in the first half as it looks to "reset" the business amid a "very challenging" retail environment.

In the 26 weeks to 26 October, the fashion retailer swung to a £4.2m loss from a £26.4m profit in the first half of last year, with total group revenue down 11% to £369.1m.

Underlying pre-tax profit tumbled 98.4% to £0.2m and the proposed interim dividend per share was slashed to 2p from 9.3p.

The company said the decline in revenue reflects an expected year of "reset", as it addresses a number of legacy issues across the business. It noted that the fall in retail sales moderated through the first half, with second-quarter store revenue up on the first quarter as key initiatives were implemented.

Superdry also said it had seen an "encouraging" early start to third-quarter peak trading, with its strongest online Black Friday day ever.

Founder and chief executive officer Julian Dunkerton said: "At this halfway point in our financial year, I am pleased with the progress we have made to comprehensively reset Superdry. We're doing this through our product and brand, our physical and digital retail operations and a renewed focus on the retailing basics.

"We are only eight months into a process that will take two to three years, but I have great confidence in the strength of our new executive leadership team. I am also pleased with the trajectory of performance we have seen from Q1 to Q2 and subsequently into our peak trading period, which gave us our biggest online trading day ever. However, we remain cautious about the challenging market conditions over the peak trading period."

At 0915 GMT, the shares were down 4.4% at 478p.

RBC Capital Markets said:"Superdry has reported broadly in line 1H20 interim results today, however we expect underlying consensus profit before tax for the full year to fall from circa £30m to circa £20m due to two effects: c.£3m on stock accounting and c.£7m on debtor balances and a write-down of the China JV.

"Superdry’s outlook statement is mixed given a strong Black Friday online but a very competitive trading environment. At the meeting, we expect it to state that it is showing good inventory discipline, increasing its options of key lines and we expect it to highlight increased ship from store and to stress its sustainability credentials, particularly in organic cotton products."