Superdry sinks to $27.5 million loss as turnaround flounders

BLOOMBERG

Superdry Plc swung to an annual loss and expects no revenue growth in the current year as the fashion retailer struggles to compete with other clothing brands during the UK’s cost-of-living crisis.
The company, known for its logo-printed T-shirts and bright colours, reported a pretax loss of £21.7 million ($27.5 million) for the full year, compared with a profit of £21.6 million the prior year.
Net debt has grown to nearly £26 million from £1 million a year earlier and the company said there was still “a material uncertainty” around its ability to continue as a going concern due to limited headroom in its funding arrangements and wider economic pressures.
Superdry’s stock was suspended amid delays in completing the audit of its accounts.
The fashion retailer has issued two profit warnings this year but founder Julian Dunkerton remains optimistic. “This is about getting our cost base fit for the future,” Dunkerton, chief executive officer, said. “The brand is actually very strong. It’s a huge business and our marketing is getting better all the time.”
The retailer had to raise equity in May and has taken on expensive borrowing from lenders of last resort including Elliott-backed Bantry Bay Capital and Hilco Capital Ltd. It’s also agreed to sell its brand in the Asia-Pacific region for $50 million and Dunkerton said Superdry is likely to repeat that deal in other geographies to raise cash.
“It’s an important way of bolstering our balance sheet and if it’s right for that particular territory we will consider it,” he said.
The company’s wholesale business — where it sells items via third-party retailers — has been particularly weak due to lower demand post-lockdowns. Superdry earlier this year put in a new leadership team for wholesale and pledged to work more closely with retail partners to ensure they stocked the best designs.
Operating costs rose nearly 10% last year as rents and business rates returned to normal after the pandemic and amid higher energy and wage bills.
It has reduced jobs at its head office as part of a wider plan to remove £35 million of costs.
Superdry said conditions remained challenging and warned that its focus on cost savings and margin improvement means it expects no meaningful revenue growth in the current fiscal year.