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Superdry issues profit warning after founder's return
SUPERDRY Plc's founder says he's cutting discounts and taking other steps to turn around the UK fashion chain after a profit warning that followed his return to lead the company.
The shares bounced back from a plunge early on Thursday in London after the retailer warned that its full-year underlying pretax profit would be below market expectations of £54 million ($95.7 million) to £59 million because of weaker e-commerce and wholesale sales. At midmorning they traded 2.9 per cent higher.
Founder Julian Dunkerton said he's moving to improve the product range and aiming to sell more goods at full price at the retailer, known for outerwear emblazoned with Japanese characters. He returned as interim chief executive officer last month following a campaign in which he criticised the previous management team for a lack of innovation and creative flair.
"It's counterintuitive to offer discount upon discount," Mr Dunkerton said in an interview. "We are already seeing an increase in sales and margins which shows that old-school retailing skills are paying dividends."
The retailer's performance has declined in the past year and a half, with Mr Dunkerton criticising a decision to expand the range beyond the coats and jackets for which it's best known. The largest shareholder in Superdry with a stake of just over 18 per cent, he left last year but campaigned successfully to be re-elected to the board following the decline in performance.
The turnaround plan is causing some short-term pain, with online sales falling in the fourth quarter after the company reduced discounts and promotional activity. Superdry said it's moving to increase the range of goods sold via e-commerce while boosting the density of stock in stores. It plans to introduce 500 new products in the coming six months.
Mr Dunkerton, who started out selling clothes at a market stall in 1985 before teaming up with designer James Holder to create the Superdry brand, said that since rejoining the company he's been busy with all the "fun stuff". This includes analysing Superdry's offering.
"We had 4,000 items online but there are close to 20,000 products available in various warehouses around Europe," he said. "The logical move is putting the other 80 per cent online." The founder said he's also boosting the in-store offering. Superdry's Regent Street store in London has already increased its range to 3,500 items from 2,800 since Mr Dunkerton rejoined.
"There remains much to do to restore the Superdry brand to be a growth story again," said Greg Lawless, an analyst at Shore Capital. "It is perhaps not a surprise to see the new management team lowering the previous regime's profit guidance." BLOOMBERG