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By
Reuters
Published
Oct 31, 2014
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SuperGroup shares slide as firm warns on profit

By
Reuters
Published
Oct 31, 2014

LONDON, United Kingdom - SuperGroup, the British company behind the Superdry fashion brand, warned that full-year profit would fall short of market forecasts, becoming the latest retailer to see a warm autumn hit demand for winter clothes.

The firm's surprise statement follows one on Wednesday from Next, Britain's No. 2 clothes retailer, which also cut its profit forecasts due to the warm weather, prompting analysts to expect more promotions ahead of Christmas as retailers battle to shift unwanted stock.


Shares in SuperGroup, whose trademark jackets, hooded tops, check shirts and jogging bottoms are popular with twentysomethings, slumped 10 percent in early trade on Friday.

"After a strong start to the quarter, September and October have both seen an exceptional period of warm weather across the UK and the rest of Europe which is expected to continue into November," SuperGroup said.

"This has resulted in a high degree of uncertainty around the future performance of the autumn/winter range, particularly outerwear ... a significant part of the Superdry product mix."

That uncertainty, coupled with high levels of discounting and the firm's infrastructure investments, forced a more cautious outlook on a second half which generates 70-80 percent of the group's full-year profit, SuperGroup said.

The company, which replaced its founder and chief executive Julian Dunkerton with ex-Co-op Group boss Euan Sutherland nine days ago, said it expected full-year profit to be in the range of 60 to 65 million pounds ($104 million), below market forecasts of 69 to 73 million pounds, according to Reuters data.

Total retail sales, including from new shops, in the 13 weeks to Oct. 25 rose 11.4 percent but fell 4.2 percent at stores open over a year, with trading becoming much more difficult in recent weeks.

In wholesale, delayed orders due to the tough conditions sent sales down 3.7 percent during the period, which is the company's second quarter.

The firm said it had no plans to respond by changing its pricing strategy.

Cantor Fitzgerald analyst Freddie George retained his 'buy' rating on the firm but chopped his pretax profit forecast to 62 million pounds from 69 million pounds.

"For H2/FY15, we are concerned that the company ... will not have any 'mega sellers' in Q3 as in previous years and will be impacted by a more discount driven market ahead of Christmas in response to the milder weather," George said.

SuperGroup said its growth strategy remained on track and unchanged by short-term external events.
 

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