Superdry warns on profit amid ‘unseasonably’ hot weather

The fashion business said “unseasonably hot weather” in its core markets – the UK, continental Europe and the East coast of the US – has “significantly affected demand” of sweats and jackets, which account for around 45% of its annual sales.

Superdry said that would hit the bottom line by around £10m.

It added that foreign exchange hedging mechanisms “have not provided the same degree of protection as expected” and would heap further pressure on profitability, sparking around £8m of additional foreign exchange costs.

Superdry said the “importance” to the business of cold weather categories meant its bottom line would be “heavily influenced” by performance in the second half of the year.

The retailer usually delivers 70-75% of its profit in the second half of its financial year.

The fashion chain insisted that, in the “small number of cooler days” the UK experienced in September, footfall increased and sales of cold weather products rose.

Innovation programme

Superdry said it was five months into an 18-month “product diversification and innovation programme”, designed to “broaden choice” for customers and “address its reliance” on those autumn and winter ranges.

It is now “accelerating” its expansion into categories such as dresses, skirts, denim and sportswear.

Superdry said it would “maintain strength” in core categories such as sweats, jackets and T-shirts by focusing on “more relevant innovation” in the future.

It will also plough £5.5m more than previously expected into brand communication, digitisation, automation and product development during its second half.

Despite the negative impact it expects on full-year profitability, Superdry said it was on course to report “mid-single-digit” growth in brand revenue and ecommerce sales during the 12-month period.

Wholesale revenues are expected to report “high-single-digit” growth.

However, it said revenues raked in from its stores would suffer a “low-single-digit” decline.

Superdry boss Euan Sutherland said: “Superdry is a strong brand with significant growth opportunities, backed by robust operational capabilities, but we are not immune to the challenges presented by this extraordinary period of unseasonably hot weather.

“We are well prepared for peak trading, but the second half of financial year 2019 presents both risks and opportunities.

“We continue to focus on delivering efficiencies and cost savings to meet the current challenges and have confidence in our strategy for growth and so are accelerating investments in our future.”