(Alliance News) - Superdry PLC on Friday said that challenging markets and weather conditions had hurt its interim earnings, with the company also set to lose another financial officer in March.
The Cheltenham, England-based clothes retailer posted GBP219.8 million in revenue for the six months to October 28, down 24% from GBP287.2 million a year prior.
Retail revenue was down 13% to GBP157.2 million from GBP181.0 million, while the wholesale division dropped a hefty 41% to GBP62.2 million from GBP106.2 million. Superdry blames this "softer" performance on "declining volumes and structural changes within the broader market", as well as the company's decision to exit its US operations.
A challenging consumer market, alongside unseasonal weather and a "backdrop of macroeconomic uncertainty" have combined to critically damage Superdry's earnings, according to Chief Executive Officer Julian Dunkerton. Superdry expects this challenging environment to be reflected in its full year results.
It swung to a pretax profit of GBP3.3 million from a loss of GBP17.7 million on a statutory basis, but its adjusted pretax loss widened to GBP25.3 million from GBP13.6 million.
The statutory figure received a GBP36.3 million boost from the sale of its intellectual property in the Asia Pacific region, which was partially offset by a non-cash impairment of GBP10.2 million.
Inventories were down 24% over the six months to GBP130.9 million from GBP172.6 million a year prior.
Given its uncertain outlook, Superdry said it is "not prudent" to recommend dividends in the near future, and is restricted from doing so without permission from Bantry Bay. The London-based specialist lender provided Superdry with GBP80 million worth of financing in the form of a loan facility in December 2022, from which the company has drawn down GBP56.7 million.
The company is making efforts to improve its balance sheet, and has embarked on a "turnaround programme" designed to position it for "long-term success" through improved efficiencies. Right-sizing its operating cost base is expected to deliver over GBP40 million in savings for the full financial year, ahead of initial targets of GBP35 million. Superdry also secured a lending facility for up to GBP25 million with Hilco Capital Ltd in August.
However, an accelerated clearance sale of aged inventory may be required to save the company's finances, Superdry said, alongside further brand rights disposals in "non-core territories".
Commenting on the results, Dunkerton added: "Despite the near-term difficulties, we have made significant operational strides over the half year as part of our ongoing turnaround. Our cost savings programme remains on track and our inventory reduction programme is progressing well. We have also taken further action to support the balance sheet with a secondary lending facility agreed with Hilco Capital in August, and the agreement for a joint venture and disposal in South Asia, demonstrating the continuing attractiveness of the brand in foreign markets."
The company also announced the replacement of its chief financial officer, with Shaun Wills stepping down after three years with the company on March 31. Giles Davis has been appointed interim CFO, joining Superdry on January 29, with an expected appointment on April 1. Davis will, come April, be Superdry's fifth CFO in as many years.
Davis, who has previously worked with McColls Retail Group PLC, Casual Dining Group and Wiggle Ltd, has a "strong track record in consumer-facing businesses", the company said.
Shares in Superdry were down 4.7% at 16.08 pence each in London on Friday morning.
By Hugh Cameron, Alliance News reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2024 Alliance News Ltd. All Rights Reserved.
Superdry (SDRY)
