Superdry cuts its losses despite tumbling revenues
Revenues at fashion brand Superdry have dropped 1.9 per cent and 24.9 per cent on a one-year and two-year basis respectively, as the pandemic continues to disrupt high-street trading.
The store has also moved to a full-price trading stance, which has also resulted in a further decline in sales in its half-year report.
Nevertheless, the latest update has revealed the company is plotting a route to profitability, with gross margin gains reported across both its stores and ecommerce division, which were up 5.1 and 7.7 pts year-on-year.
Meanwhile, adjusted losses before tax improved have fallen from £10.6m to £2.8m, broadly in line with its last and is in line with the first half of 2020, the last set of pre-pandemic results not fully consumed by Covid-19.
Statutory profit before tax increased to £4m, following reported losses in the previous two half-year reports, with Superdry benefitting from the fair value movement on foreign exchange forward contracts.
This gave the store a £6.2m credit boost.
Net working capital has reduced £14.5m year-on-year, following reductions in inventory and trade receivables and an increase in trade payables.
This was a consequence of global supply chain issues felt across the sector and deferred rent, causing a later intake of inventories.
The clothing chain ended the half-year £3.9m net debt, with the group partially unwinding a £10m repayment in debt.
This is significantly lower than last year’s position, where it reported £34.1m net cash, when it benefitted from the initial deferrals and rate holidays.
However, it remains ahead of the pre-Covid half-year position in 2020, when it was suffering from £9.3m net debt, which it argues is more reflective of its working capital cycle.
As of 17 January the business had net cash of £20.4m
The company’s outlook is that Superdry will achieve current market expectations for the full-year, with performance over the peak trading period providing the retailer with an increased sense of optimism.