Superdry agrees new lending facility; Q1 better than expected
Clothing retailer Superdry said on Monday that it has agreed new £70m lending facility to help it weather disruption from the Covid-19 pandemic and that trading in the first quarter has been ahead of its expectations.
The company has entered into a new financing facility with existing lenders HSBC and BNPP, extending the term until January 2023. It said that this, along with its strong net cash position, gives the group the group "the necessary flexibility and liquidity going forward".
The new asset backed lending facility replaces the existing facility it had in place, which was due to expire in January 2022.
As at 6 August, Superdry had £57.8m net cash on the balance sheet, compared to £39.8m on 7 May and £2.1m at the same time last year. "This strong position is largely due to the significant and decisive management actions taken to preserve cash ahead of our working capital trough in October," it said.
The company also said trading in the first quarter has been better than initially expected, although disruption from the coronavirus pandemic continues to "materially impact" its performance year-on-year.
In the 13 weeks to 25 July, total group revenue fell 24.1% on the year, largely due to store closures as a result of Covid-19. The company gradually reopened its stores at the start of the new financial year and around 95% are now open, with store revenue down 58.1% in the first quarter. In the wholesale division, sales were 31% lower on the year.
On the upside, however, the online segment has continued to perform well, with sales up 93.2% in the first quarter, normalising in recent weeks as stores re-open.
Chief executive officer Julian Dunkerton said: "The actions we have taken to date have greatly strengthened our cash position, which together with our new ABL Facility, give us the flexibility to execute our current plans and to secure our recovery.
"Together, we are making our way through this unprecedented period, and I'm confident we can reset the brand and deliver on our transformation plans."
Superdry expects its results for the year to 25 April 2020 to be released in mid-September.
At 0940 BST, the shares were up 18% at 139.10p.
Russ Mould, investment director at AJ Bell, said: "While the big falls in revenue over recent months would largely have been expected there was some good news this morning as the firm secured some breathing space with its fresh asset-backed lending facility.
"The strong web-based sales, while a natural offshoot of lockdown, at least suggest that this part of the business is operating as it should and able to respond to a rapid increase in demand in timely fashion.
"With the immediate issue of survival seemingly addressed for now, attention will turn back to Dunkerton’s efforts to restore the brand’s appeal and credibility among shoppers.
"The fear for shareholders is that its traditional customer base may just have tired of its faux-Japanese stylings and moved on.
"Dunkerton will have to demonstrate to the market that there is some light at the end of the tunnel as he looks to set the business on an upwards trajectory or investors may run out of patience."