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.
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.
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.
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.”