Superdry blames warm weather on crashing profits

Superdry's shares have crashed more than 34 per cent in trading today, after the retailer blamed “unseasonably warm weather” for a lull in sales that resulted in a 49 per cent fall in half-year profits.

The group warned that profits for the full-year are now projected to come in at £55-70m, falling below analyst expectations of roughly £84m.

The figures

Underlying pre-tax profit hit £12.9m in the half-year to the end of October, marking a 49 per cent drop from the same period in the previous year.

Underlying basic earnings per share dropped to 11.9p, falling from 25.8p one year ago.

Group revenue climbed 3.1 per cent to £313.6m, while global brand revenue excluding China rose from £781m to £831m.

Why it's interesting

Following a profit warning in October, Superdry has been hit by the persistent warm weather that has dented profit, admitting its reliance on cold-weather related products today.

The firm also pointed the finger at what it described as "a lack of innovation in some of its core categories".

Analysts Berenberg downgraded its stance on the retailer yesterday to 'hold' and cut its earnings forecast for 2019-21 ahead of today's results.

It comes days after Superdry’s co-founder Julian Dunkerton ramped up pressure on the retailer by criticising its strategy in a Liberum note.

Dunkerton told Liberum: “The interaction between stores and the internet is going to be so fundamental to the future of retail.

“Consumers have adopted the internet and by doing so have moved away from the limitations of the high street and towards a world of unlimited choice – the premise here is if one does not participate in this world you will get left behind.”

Hitting back at Dunkerton’s recent comments, Superdry’s non-executive chairman Peter Bamford said today: "It is pretty clearly from the board’s point of view that since Julian’s departure the management team has had the capacity and freedom to be able to innovate in the way that we are now describing."

What Superdry said

Chief executive Euan Sutherland said: “Superdry had a difficult first half, impacted by unseasonably warm weather across our major markets, a consumer economy that is increasingly discount driven and the issues we are addressing in product mix and range.

“Superdry is a strong brand and has strong operational capabilities. We are focused on an intensified transformation programme to reset the business and address the legacy issues we face, particularly in product mix and range.”