Superdry blames warm weather as shares plummet

Superdry shares slumped by more than 30% on Wednesday after it issued a severe profit warning blamed on continued warm weather and weak consumer spending.

The collapse in profits will give more credence to the ongoing campaign of co-founder Julian Dunkerton to return to a leadership role at the business. The shares have lost 80% of their value this year.

The Superdry chief executive, Euan Sutherland, said profits would now be somewhere between £55m and £70m in the current financial year, which runs until the end of April. The bottom of that range would represent a 40% slump on last year, when the fashion retailer banked profits of £97m.

“Superdry had a difficult first half, impacted by unseasonably warm weather across our major markets, a consumer economy that is increasingly discount driven and the issues we are addressing in product mix and range,” said Sutherland.

The retailer was updating the City on its interim results, which showed underlying profits down 49% to £12.9m. The picture got worse in November with Sutherland stating that the mild weather, which hit demand for its hoodies and winter jackets, had dented profits by £11m. He warned that this would be repeated in December if trading did not improve.

Maplin, Toys R Us and Jacques Vert have all collapsed in recent months, but several retailers and restaurant groups are facing financial problems and are trying to close stores or negotiate rent cuts.

Gourmet Burger Kitchen: The upmarket burger chain wants to close 17 of its 85 restaurants via an insolvency process known as a company voluntary arrangement (CVA)

House of Fraser: The department store chain is expected to close about 12 stores after being bought out of administration by Mike Ashley. It had agreed a CVA under which 31 stores were to close, but this lapsed on administration.

Homebase: The DIY chain is closing at least 42 stores after completing a CVA organised by new owner Hilco.  The restructuring expert bought the DIY chain for £1 from Australia’s Wesfarmers who botched an attempt to bring its Bunnings chain to the UK.

Poundworld: The discount retailer has closed all its 355 stores, with the loss of 5,100 jobs after falling into administration in June.

Cau: The owner of the Gaucho and Cau steakhouses fell into administration in July leading to the closure of all 22 Cau restaurants, with loss of 750 jobs. The groups lenders have since bought the 16 Gaucho outlets.

Mothercare: The chain is closing 60 of its 137 outlets after agreeing a CVA in May. Additional closures in July mean 900 jobs will be lost.

Carluccio’s: The Italian chain secured a CVA to close 30 of its 99 restaurants in late May.

New Look: The chain is closing 85 stores in a restructuring plan announced earlier this year. Its chairman, Alistair McGeorge, said the future of a further 39 stores was in doubt as talks with landlords continued.

Carpetright: The retailer obtained a CVA in April to close 92 of its 409 UK stores in September with the loss of about 300 jobs.

Prezzo: In March the Italian-themed restaurant group secured a CVA to close 94 of its 300 restaurants, with the loss of 500 jobs. Rent cuts were agreed on a further 57 locations.

Jamie’s Italian: The chain closed six locations in 2017 and this year agreed a CVA to close about a third of its 35 loss-making outlets.

Byron: The upmarket burger chain is closing up to 20 of its 67 restaurants after a CVA agreed in January.

Debenhams: The under-pressure department store chain has said it could close up to 50 of its 165 stores stores and wants to get rid of space at 30 more by bringing in gyms and other services.

M&S: The high street stalwart wants to close 100 outlets – a third of its main stores by 2022 as part of a ‘radical transformation’ plan.

Sutherland, the former chief executive of the Co-op Group, added that Superdry was reviewing its store estate as part of a plan to save £50m over the next three years.

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In the latest blow from the troubled high street, Sutherland said the company would consider closing or downsizing some of its stores. It would also look at relocations and would try to negotiate lower rents. Around 60% of Superdry’s store leases come up for renewal within four years.

This year’s weak performance has prompted Dunkerton to try to force through a change in strategy. Dunkerton co-founded the chain in 2003 and still has an 18% stake. Dunkerton handed over the reins to Sutherland in 2014, finally leaving the board in March this year.

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Dunkerton’s proposal to rejoin the board was unanimously rejected by its directors, said Peter Bamford, Superdry’s chairman. He insisted that Dunkerton will not return, although he added that the board remains in dialogue with the former chief executive as he is the largest shareholder.

“It has been since Julian’s departure that the management team has had the capacity and the freedom to innovate,” Bamford said.

The dispute is centred on the board’s strategy of reducing the number of different products it offers, such as hooded jumpers and T-shirts, and to focus less on heavily branded items. Dunkerton has outlined plans to do the opposite.

GlobalData retail analyst Amy Higginbotham said Superdry’s issues were more deep-seated than the weather. “Superdry is failing to capitalise on the athleisure boom which is helping drive sales at competitors such as JD Sports. It also struggles to compete with trend-led clothing specialists including Topshop and ASOS.”

She added: “The retailer should partner with celebrity influencers, as it has done in the past with David Beckham and Zac Efron, to engage its core consumer group once again.”

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