Yahoo Finance Superdry wilts in the heat as sales of jackets cool
Superdry has fallen out of fashion with investors after admitting that it failed to shift jackets and sweaters in the middle of a heatwave.
The FTSE 250 clothing retailer, famed for putting snippets of gibberish Japanese on hoodies and checked shirts, warned its profits for the year would be £10m less than expected due to “unseasonably hot weather”.
Shares in Superdrug slumped 20pc to 816p in afternoon trade after resorting to the time-honoured retail excuse of blaming the weather for poor sales. It said the warm spell that lasted into September and the first half of October in the UK, Europe and the east coast of the US hit the sale of jumpers and jackets, which account for around 45pc of its annual sales.
It also said hedging mechanisms it put in place had not provided the degree of protection expected, which will lead to around £8m in additional foreign exchange costs, split evenly over the year.
The company expects low to mid-single digit sales growth over the period.
Euan Sutherland, who has been chief executive since 2014, said Superdry was “not immune to the challenges presented by this extraordinary period of unseasonably hot weather”.
“We are well prepared for peak trading, but the second half of financial year 2019 presents both risks and opportunities,” he said.
As 70-75pc of its profits are usually delivered in the second half of the year, the company said the full year would be “heavily influenced” by its second-half performance.
It plans to invest around £5m in its "brand communication, digitisation and automation" as well as product development to drive growth.
Wayne Brown of Liberum, said: "Full-year profits remain heavily dependent on the rest of winter and the ability to sell through stock in what will inevitably be a more highly promotional environment." But he added that there could be worse to come: "The degree that gross margins get impacted in [the second half] could weigh further on guidance as we believe today’s update relates to trading until Oct 15."
Sofie Willmott of GlobalData said Superdry could have taken more effective action.
She added: "Given that the only certainty with weather is that it can be unpredictable, Superdry should have been better prepared to react to the prolonged warm summer, cutting back on volumes of jackets and coats to avoid overstocks and the need for markdowns."
Superdry has 139 owned stores across the UK and mainland Europe and more than 300 franchises and concessions.
