Superdry Reports Widened Annual Losses but Sees Strong Start for AW23 Offer
Superdry recently unveiled its annual results, albeit with a slight delay, covering the period up to the end of April. The report revealed a marginal rise in revenue as the brand continues its recovery, but it also highlighted a significantly increased loss.
In addition to the annual results, Superdry provided an update on its Q1 performance, spanning the three months ending in July. During this quarter, group revenue experienced an 18.4% decline, aligning with the company’s expectations. This decline was offset by full-price trading and a cost-efficiency program that contributed to margin improvement.
Q1 saw a 3.7% decline in store revenue year-on-year, primarily attributed to unusual weather patterns and a delayed start to the end-of-season sale. E-commerce sales also fell by 12.6%, influenced by the timing of clearance sales and a deliberate reduction in digital marketing expenditure. The Retail segment as a whole faced a 6.6% decline.
Meanwhile, Wholesale revenue in Q1 plummeted by 50.3%, partly due to year-on-year timing differences. Even after accounting for these factors, the underlying performance was approximately 30% lower. This decline reflects strategic changes, including the exit from the US wholesale operation. Superdry acknowledged that the impact of new leadership in this area and the transition to an agency model in major European markets would take time to materialize in sales figures.
Turning to the full-year results, Superdry reported a 2.1% increase in group revenue, totaling £622.5 million. However, considering double-digit inflation, this growth may not translate to real terms. Retail revenue witnessed a robust growth of 14.6%, while Wholesale faced a decline of 19.1%, impacted by partners’ cautious outlook.
E-commerce revenue demonstrated a healthy surge of 14.3%, driven by strong third-party site performance and a successful Black Friday event. Despite the revenue growth, the gross margin contracted by 3.2 percentage points to 52.8%, primarily due to the ongoing clearance of aged stock.
Superdry also recognized the delayed recovery in Wholesale and the return to standard rent and business rates, affecting underlying profitability. This resulted in an adjusted pre-tax loss of £21.7 million, contrasting with a nearly identical profit in the preceding year. The net loss expanded to £148.1 million from a £22.4 million deficit, primarily due to non-cash impairments of store assets, a reduction in recognized deferred tax assets, and other adjusting items.
On a positive note, the company bolstered its balance sheet through cost-saving initiatives, fundraisings, and sustainability efforts. The percentage of garments containing sustainably sourced materials increased to an impressive 62%, surpassing the targeted 47%.
CEO Julian Dunkerton acknowledged the business’s challenges throughout the year and emphasized the brand’s resilience and momentum. Despite the external turbulence, Superdry’s stores and e-commerce platforms delivered strong sales performances. Dunkerton expressed enthusiasm for the Autumn/Winter 23 collection and the brand’s potential on a global scale.
However, Superdry remained cautious due to the unpredictable nature of the consumer retail market. Although the new AW23 collection has shown strong early-season sales, the company does not anticipate significant revenue growth for the full year. Instead, the focus will be on cost-saving measures and margin improvement.