27th Jan 2023 10:12
(Alliance News) - Superdry PLC on Friday revealed a swing to loss in the first half of its financial year, after underperformance by its Wholesale segment, which has continued to trouble the clothing retailer in the second half.
Shares in the Cheltenham, England-base firm plunged 17% to 123.60 pence in morning trade in London. The stock is down 44% over the past 12 months.
In the six months ended October 29, Superdry swung to a pretax loss of GBP17.7 million from a profit of GBP4.0 million a year prior.
Revenue in the half inched up by 3.6% to GBP287.2 million from GBP277.2 million. This was largely driven by a strong performance in its owned stores, the firm explained.
Store revenue grew 14% against the previous year as the company saw traffic shift back to physical retail and a normalisation in online revenue. E-commerce revenue still grew by 1.6% year-on-year, however.
Meanwhile, Wholesale revenue declined by 5.2% against the previous year, due to a lagged recovery after Covid and shipment timings.
Superdry said this underperformance hurt interim profit, which led the firm to lower its guidance for full-year adjusted profit.
Superdry said it now expects to be broadly breakeven in financial 2023 at the adjusted pretax level. Previously, the firm had expected adjusted pretax profit between GBP10 million to GBP20 million. In financial 2022, adjusted pretax profit was GBP21.9 million, swung from a loss of GBP12.6 million the year before.
"We don't expect market conditions to become easier any time soon, but with a new financing package in place and the brand in great health, we approach the year ahead with optimism," Founder & Chief Executive Julian Dunkerton added.
Analysts at Liberum lowered their own forecasts for Superdry as a result of the updated outlook.
Liberum now expects Superdry to report a pretax loss of GBP6 million in financial 2023, down sharply from previous expectations of a GBP10 million profit. In financial 2022, Superdry booked a pretax profit of GBP17.9 million, swung from a loss of GBP36.7 million in financial 2021.
"It is important to note that the downgrade is largely driven by wholesale disappointment where the incremental profit drop through is quite dramatic," it explained.
More positively, Liberum said it expects to see a Covid-related confidence lag in Wholesale close as partners see how successfully the firm's autumn/winter 2022 fashion season has sold through retail channels.
"The key highlight of the half was an outstanding Christmas trading period where the AW22 collection clearly drove a strong resurgence in retail revenues. This alone bodes well for [calendar year 2023] and how the brand is now resonating well with the consumer," it said.
On this basis, Liberum said Superdry sharesare "cheap" and offer "significant long-term value".
By Heather Rydings, Alliance News senior economics reporter
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