Superdry’s losses mushroom as store closures hit sales

Superdry’s shares plummeted by around a sixth today after it said the forced closure of its outlets caused its losses to mount.

Sales sank 23.4 per cent to £282.7million in the six months to October 24 at the Cheltenham-based fashion brand despite year-on-year online trade shooting up by around half.

Pre-tax losses climbed 350 per cent to £18.9million at the business, which said it lost 23 per cent of trading days during the half-year period to social distancing rules and lockdown restrictions.

Hard times: Sales sank 23.4 per cent to £282.7million in the six months to October 24 at the fashion brand despite year-on-year online trade shooting up by around half

The retailer said revenues had continued to be weak over the winter period when England was either in a national lockdown or when areas were subject to strict tiered restrictions.

Fewer than half as many store sales and 23 per cent fewer wholesale purchases were made in the 11 weeks to January 9. On that end date, the firm said that 173 of its establishments – more than 70 per cent of its estate portfolio – were closed.

Due to the uncertainty and harms engendered by the coronavirus pandemic, including the impact of shop closures, Superdry said it was not providing any formal guidance for the financial year.

It forecasts ‘prolonged store closures and subdued footfall’ during the start of this year, though rent waivers and government furlough support are expected to somewhat mitigate this.

Digital sales are also expected to calm down in the fourth quarter of the 2021 financial year, whilst wholesale revenues are set to end ‘broadly in line with current market expectations.’

The company’s trade may have been dramatically hurt, but it remarked that it had £130million of liquidity at hand, and had not taken advantage of a £70million lending facility.

Superdry co-founder Julian Dunkerton (pictured) returned as the group’s permanent chief executive in 2019 to try and arrest a decline in sales at the Cheltenham-based group

Chief executive Julian Dunkerton remarked: ‘Covid-19 has brought substantial challenges to Superdry as with many other brands, and this has continued through the first half and into the second with renewed lockdowns in our key markets.

He added: ‘The brand has continued to focus on the reset, however, with over 70 per cent of stores currently closed and having to shut a significant number over the peak, it will take time to see the benefits of all our hard work flow through to the results.’

The 55-year old Superdry co-founder returned as the group’s permanent chief executive in 2019 to try and arrest a decline in sales that was variously blamed on a 2018 summer heatwave, promotional activity by rivals, and product shortages.

Apparel shops run by brands like Superdry have had to close during national lockdowns

He set about rolling back discounts and focusing on full-price sales; however, the first Christmas after his return was a weak one for the business, and the pandemic accentuated problems for the group.

Since the start of 2018, the group’s share price has plunged by around 90 per cent to £2.01 today.

Apparel stores are considered non-essential retailers by the government, so all of them have had to close during times of national lockdown, which has severely impaired brands that rely heavily on physical outlets for purchases.

Marks & Spencer fell to its first loss in 94 years as a publicly-traded firm, partly as a result of diminishing clothes sales, and Joules has warned it could lose between £14million and £18million in sales if existing trading restrictions continue until April.

Online-only traders such as Boohoo and Asos have tended to do very well out of the pandemic though, with the latter registering a 24 per cent jump in sales in the last four months of 2020.

Since the start of 2018, Superdry’s share price has plunged by around 90 per cent.