Superdry has warned that it anticipates lower than forecasted profits for the year, blaming hot weather and tough market conditions.
In a statement, the brand said that hot weather in the UK, Europe and the eastern US adversely impacted sales through the summer, and into September and October. As a result, profits are expected to take a £10m hit for the full financial year.
It now expects “mid-single-digit revenue growth” – with an increase in in ecommerce sales – but a single-digit decline in own-store sales.
Superdry said warm weather over the summer had continued into September and the first half of October, and this ”significantly affected” demand for autumn/winter product, particularly sweats and jackets, which account for around 45% of its annual sales.
It is currently undergoing a product diversification programme that will redress the balance of product by accelerating growth in other categories.
Historic currency hedging mechanisms were also noted to have failed to provide the anticipated level of protection, with an expected additional foreign exchange cost to the business of £8m across the year. The business is also intending to accelerate investments in communication, digitisation and automation, which will cost an additional £5m.
Before the announcement, analysts had predicted that Superdry’s underlying profit before tax would fall between £107.1m and £111.6m. Following today’s announcement, the figure is likely to drop to around £86.5m. Last year, Superdry’s underlying group profit before tax was £97m.
Commenting on the announcement, chief executive 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. There are significant opportunities ahead for Superdry in terms of geographical market expansion, category extensions and growth and the ability to leverage its multi-channel operating model in a digital world to deliver to customers in whichever way suits them best.”