Dec 12, 2019
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Brand reset hurts Superdry results but signs are good says CEO

Dec 12, 2019

It's not so many years ago that Ted Baker and Superdry were two of the most successful UK retailers around. But that situation has changed and we heard from Ted Baker earlier this week about how tough times are. So what about Superdry?

Image: Superdry

It released half-year results to October 26 on Thursday and said its “reset is under way” with its full-price stance “protecting” its margin and the brand.

But its figures didn’t look good, although that had been expected and unlike Ted Baker, Superdry is already in the middle of its recovery strategy.

So let’s look at the numbers. Total revenue fell 11% to £369.1m and underlying pre-tax pre-IFRS 16 profit plummeted 98.4% to £0.2m. Its pre-tax loss was £4.2m, compared to a profit of £26.4m a year ago, dented to the tune of £2.5m by the first-time inclusion of the IFRS 16 accounting standard.

All channels declined. Retail division revenues decreased to £215.1m from £242.8m, with declines in e-tail of 10.7% and store revenue of 11.7%. Wholesale fell 10.4% and “reflects the impact of a previous retail strategy of heavy discounting and lower quality product, as well as a change to align deliveries of forward order product to the requirements of our wholesale customers, rather than our reporting calendar”.

The revenue decline was expected as Superdry resets its business and addresses legacy issues and it added that the retail sales decline “moderated through [the] first half, with Q2 store revenue stronger than Q1 as key initiatives were implemented”.

And importantly, the focus on full-price sales drove a total underlying gross margin increase of 250bps, but it was offset by a 180bp foreign exchange headwind and stock accounting changes of 80bps.

The company added that it’s seen an “encouraging early start to Q3 peak trading with [the] strongest online Black Friday day ever,” although with much of the peak trading period still to come, it’s too early to tell how H2 will turn out.

CEO and co-founder Julian Dunkerton seemed happy. He said: “I am pleased with the progress we have made to comprehensively reset Superdry. 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. However, we remain cautious about the challenging market conditions.”


Key to its recovery will be the product and the way it’s sold, of course, and this is being changed.

But given design lead times, only a small proportion of its AW19 range has been edited, and its “renewed design philosophy will be substantially implemented by” AW20. It remains on track to increase the new seasonal option count by over 50% by AW20.

A new Retail Director will join in Q1 next year and this will have an impact too. For now though, it’s resetting the consumer journey, returning fixtures and fittings and repopulating with 25% more options being added, improving the product density and customer choice” across its stores. And those stores will return to a two-season model, populated every six months with core range product, overlaid with seasonal ranges and premium products. And promotional sales will continue to be reined-in.

Image: Superdry

The company also said its programme of rent renegotiation has “delivered some early success, with an average 30% reduction across the first six stores that we have addressed”.

And on the e-tail front, it has doubled the number of options available online, refreshed its websites, added a fit analytics tool and can now fulfil e-tail orders from stores, which is showing early success. Meanwhile, an increased use of third-party e-tailers like Zalando, Next and Shop Direct, is driving the product to a new customer base.


While Superdry is a UK business, it has big international operations and it said these have also faced significant challenges, but it’s making “steady progress in reviewing and resetting our operations in our US and China markets”.

In the US, it’s focusing on restructuring its retail estate “and in the short-term [we] are increasing fixture densities and option counts to enhance the customer experience. We are reviewing all loss-making wholesale accounts, and have taken action to exit unprofitable key accounts, with the benefits starting to be seen in H2”.  

In China, it’s continuing to review the growth opportunity of a franchise-based operation and has “made good progress in resetting the joint venture operations with early wins secured in switching to local manufacturing, reducing lead times from 10 to two months, in turn improving margins and reducing our carbon footprint”. 

It has also been tailoring product for Chinese consumer preferences around design, fit and weight. Several loss-making stores have been exited or downsized, and the remainder of the estate is under review.

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