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(Alliance News) - Fashion chain Superdry PLC on Friday warned that it may not make a full-year profit after its Christmas trading period was compromised by subdued customer demand and stock shortages.
Superdry shares were 22% lower at 364.80 pence each in London on Friday morning in early trading.
In the year to April 25, the company said underlying pretax profit is expected to be as low as zero, and has high as GBP10 million. This would be a sharp fall from GBP38.0 million last year, as struggles at the embattled high street brand continue.
It made an underlying pretax loss of GBP2.3 million in the first-half of financial 2020.
In the 10 weeks to January 4, group revenue shrunk by 16% year-on-year, driven by revenue in its bricks and mortar units falling by 19%. The period also saw an annual revenue fall of 17% in the Wholesale division but declines in online sales were tempered at 9%, Superdry said.
"Despite a strong Black Friday event, peak trading performance has been lower than expected as we continue our strategic transition to a full price stance. Over this period the high street has seen unprecedented levels of promotional activity coupled with subdued consumer demand immediately after Christmas," the company said.
Superdry added: "These factors, combined with shortages of some better-selling product, driven by the need to reduce our inherited inventory position, adversely impacted our sales during peak trading."
Retail sales, predominantly made online, in the period after Black Friday totalled GBP23 million, lower than expected, Superdry said.
Chief Executive Julian Dunkerton said: "Everyone at Superdry continues to work intensively to deliver the turnaround of the business. While we have always said it will take time, we continue to make progress in implementing our strategy.
"A key element of this is to focus on and return to full price sales and reduce promotional activity, and we halved the proportion of discounted sales over our peak trading period, benefitting both our margins and the Superdry brand. However this adversely affected our sales during the peak trading period given the level of promotional activity in the market."
So far in financial 2020, 73% of retail sales have been made at full recommended retail price, improved from 39% in financial 2019.
Superdry added: "The benefit of strong gross margins and cost initiatives will not fully offset the profit impact of the aggregate shortfall in sales. Taking into account our revised sales expectations for the balance of the financial year, and the challenging trading environment in which we are operating, we now expect underlying pretax profit to be in the range of GBP0 and GBP10 million."
In its first-half report, Superdry said it sees second-half revenue falling year-on-year in the low single digits, leading to a mid-single digit fall in annual revenue.
Superdry has had a tumultuous time of late, with founder Dunkerton returning last April, having left the firm a year before.
Superdry issued a number of profit warnings in the period after his departure, prompting Dunkerton's return, which in turn led to an exodus of the firm's board and senior management.
Former chief executive Euan Sutherland and finance chief Ed Barker stood down in April 2019.
What's more, the company chopped its first-half dividend to 2.0 pence per share, significantly lower than the 9.3p it returned a year before.
By Eric Cunha; ericcunha@alliancenews.com
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