Superdry turnover and profit falls as business ‘‘comprehensively resets’

Fashion retailer Superdry has said that it is “pleased with the progress” it has made in ‘comprehensively resetting’ the business.

Turnover at Superdry fell 11% year-on-year in the 26 weeks ending 26 October to £369.1 million, while pre-tax profit slumped 96% year-on-year to £200,000 (from £12.9 million a year ago).

Julian Dunkerton, founder and chief executive, said: “At this halfway point in our financial year, I am pleased with the progress we have made to comprehensively reset Superdry.

“We’re doing this through our product and brand, our physical and digital retail operations and a renewed focus on the retailing basics. We are only eight months into a process that will take two to three years, but I have great confidence in the strength of our new executive leadership team.

“I am also pleased with the trajectory of performance we have seen from Q1 to Q2 and subsequently into our peak trading period, which gave us our biggest online trading day ever. However, we remain cautious about the challenging market conditions over the peak trading period”.

In his review of the business Dunkerton said the retailer had spent the period improving product density and customer choice.

It said that the first phase of this programme is now complete across its entire estate, with store stock up 3% year-on-year, which was the beginning of a reverse a 14% decline in the prior year.

Superdry stores will now return to a two-season model, populated every six months with core range product, overlaid with seasonal ranges and premium products.

Furthermore a reduction in promotional activity in full price stores saw an improvement in gross margin and promotional sales will now only be used for clearance across three specific periods – two end of season sales and Black Friday – while pricing will remain constant on never-out-of-stock and core product until the end of a season.

In its e-commerce business Superdry doubled the number of options available online, which helped it to clear aged stock, while it maintained a full price stance to protect margin and brand.

It has also implemented in-store fulfilment of e-commerce orders from 20 of its stores to date, and after three weeks it has processed over 10,000 orders in this way, representing circa 5% of online orders.  Superdry said that this allowed for the same item to be available to both physical and online customers, providing it an additional route to clear aged and broken lines.

It has also reduced promotional activity on full price owned sites in order to improve gross margin and increased its use of third-party sites – including Zalando, Next and ShopDirect – to make product available to a new customer base.

Superdry is currently closing two of its four US warehouses, and a third is set to close by July 2020 as part of what it describes as “a number of logistics efficiencies” for the first half of 2020. This will also see it reduce its use of air freight by more than half.

However, it did say that it despatched over 500,000 packages from its distribution centres on Black Friday without disruption, while reducing cost per unit by 20%.

The introduction of paperless returns, it said, will mean efficiencies for customers and distribution centres in terms of tracking, processing and replacing or refunding items.