* Co-founder Julian Dunkerton returned to business in April
* Strategy focused on full price sales
* First half underlying pretax profit down 98.4%
* Revenue down 11%, expects "low single digit" fall in
second half
(Adds detail, CEO comment, shares)
LONDON, Dec 12 (Reuters) - British fashion retailer
Superdry's first half profit has been all but wiped out
as its new leadership addresses what it regards as the missteps
of the previous management with a renewed focus on full price
sales.
The group, now led by co-founder and CEO Julian Dunkerton
following a boardroom coup in April, cautioned on Thursday that
its turnaround would take two to three years.
Echoing comments from rival Ted Baker, which warned
on profit on Tuesday, Superdry noted considerable risk over the
peak trading period, with "highly promotional and competitive"
market conditions.
"This is against a backdrop of continuing macroeconomic
uncertainty, particularly from the (Dec. 12) UK election and
Brexit, and so whilst we have started the third quarter with
encouraging trading, we remain cautious on the outlook for the
full year," it said, forecasting a "low single digit" decline in
second half revenue.
Shares in Superdry, which sells sweatshirts, hoodies and
jackets adorned with random Japanese text, were down 4.4% at
1034 GMT, paring gains over the last year to 35%.
Reversing a previous strategy Dunkerton, also the group's
biggest shareholder with an 18.5% stake, is concentrating on
full price sales and reducing promotional activity. That hurt
revenue but is helping profit margins to recover.
The group made an underlying pretax profit of 0.2 million
pounds ($256,600) in the 26 weeks to Oct. 26 versus 12.9 million
pounds in the same period last year.
Revenue fell 11% to 369.1 million pounds, though the decline
moderated through the six months and subsequently into the peak
trading period. It recorded its strongest online Black Friday
day ever.
A total underlying gross margin increase of 250 basis points
was offset by a 180 basis points foreign exchange hit and stock
accounting changes of 80 basis points.
Dunkerton's strategy is to restore the Superdry brand to its
design-led roots after the company issued a string of profit
warnings under its previous management.
His initial focus has been on getting product ranges right
and improving e-commerce. He has increased the number of
products sold online and put more stock into stores.
He said stock options in large stores were 1,578 in
September but would rise to 4,000 by September 2020.
"There is huge momentum now building, having a consistent
full price message," he told Reuters.
Dunkerton has a contract as CEO until April 2021 but said he
could stay longer.
"That's a minimum...I have no intention of leaving when it's
up through a half done job, and as long as the company's happy
with me I shall be staying," he said.
Superdry reported a statutory pretax loss of 4.2 million
pounds, reflecting charges relating to accounting estimates for
inventory and debt recoverability.
($1 = 0.7794 pounds)
(Reporting by James Davey; editing by Sarah Young, Kirsten
Donovan)
