SuperGroup blames slow January on discounting

Supergroup boss Julian Dunkerton blamed a January sales slowdown on the price-cutting frenzy of its rivals and said he is eyeing China for long-term growth.

The retailer, which owns Superdry, revised full-year profit guidance to the lower end of expectations after sales slowed in the last three weeks of January.

Dunkerton said January trading was tough: “It was the strongest level of discounting I’ve ever seen.” 

House broker Seymour Pierce estimated SuperGroup had suffered a 3.5% like-for-like decline in January following its 9.3% like-for-like jump in December.

SuperGroup’s sales slowdown in January mirrors the findings of BRC-KPMG Retail Sales Monitor, which this week revealed that industry like-for-likes fell 0.3% last month. It was the second worst January performance since 1995.

Dunkerton said that despite its full-price stance leading SuperGroup to miss out on sales last month, the retailer would not resort to discounting.

Independent analyst Nick Bubb believes SuperGroup has chosen the right route.

He said: “It’s always tempting to match what others do, but in the long-term protecting a brand like Superdry is more important.

It means people trust the price it’s sold at.”

The retailer, which operates 116 international stores, is now mulling a move into China.

Dunkerton said: “That’s the big prize. But it’s very important to get it right. We’re working on our tactics now.”

He was unable to put a time frame on its entry into China and is considering whether to do it via a franchise or company-owned stores.

In the UK, the retailer has revised its expansion plans and will now focus on opening larger flagship stores in big cities and centres, advised by property agent Jones Lang LaSalle.

Dunkerton said he expected a sales uptick and for “normal service to resume” as the retailer’s spring ranges started to come into stores.

The group’s move to lower some prices from autumn this year will help stimulate sales during the tough consumer environment according to Dunkerton.

He said: “If an 18-year-old sees a pair of chinos at £55 to £65 he may think twice, at £45 it’s a much easier buy.”

The group is passing on cotton price decreases and savings gained by its supply chain expansion to customers, which could reduce prices by as much as 30%.