The young fashion business aims to show it is back on track following a series of self-inflicted errors.
Super it certainly hasn’t been for the once darling of the stock market. Since it floated in 2010, SuperGroup has been beleaguered by troubles – including many own goals.
A warehouse glitch, “an arithmetic error” and poor communication with the City have left SuperGroup, the company behind the Superdry young fashion brand and Cult stores, feeling the pressure from shareholders. The errors even prompted an admission from chairman Peter Bamford last week, when the group reported that its profits had dried up. “Our problems have been largely self-inflicted,” he said.
SuperGroup’s problems culminated in a 14.7% drop in underlying pre-tax profit, from £50.2m to £42.8m, in the year to April 29 due to operational issues associated with a new warehouse management system brought in last September. The shock was forewarned in October when it announced that full-year profits would be hit by as much as £9m after the warehouse problems.
Six months later the City was horrified in April when SuperGroup issued another profit warning after uncovering forecasting errors in its wholesale arm, leading to a £2.5m shortfall (in its wholesale business).
So Can the Cheltenham-based company return to its former glories? Its past errors mean many are sceptical – analyst Nick Bubb likens the situation to the phrase “once bitten, twice shy”.
It is certainly trying to turn itself around, having brought in two heavyweights to its top team – Shaun Wills as finance director in March and Susanne Given as chief operating officer in April. The new hires presented at the analyst meeting last week, with analysts describing them both as “impressive” – helping to parachute some much-needed confidence into the brand. Bubb says Given gave a “professional” presentation while Oriel Securities analyst Jonathan Pritchard adds that she “presented well”.
“It was a relief there was no new bad news,” says Bubb of last week’s announcement, which promised a more “structured and disciplined approach” to how its operation is run. “The new guy [Shaun Wills] seems impressive and it’s looking like a strong management team, but it’s still a tough environment.” Like most clothing retailers, SuperGroup is also suffering from the unseasonal weather.
As well as the settling in of the new hires, there is also a renewed effort to grow its womenswear market share – an area that’s proved more challenging to the brand, known for its lumberjack shirts and heavy use of logos. Even chief executive Julian Dunkerton admitted the category had been “unremarkable”.
For spring 13 it is evolving womenswear to include a more feminine look. Dunkerton says the range will still feel like Superdry “but will be much more feminine”, adding that the range has been made more diverse.
“We have been a bit unremarkable with womenswear and this range is much more exciting and really reflects women’s shopping habits,” he said last week.
The range will feature bright splashes of neon colour along with tie-dye and dip-dye techniques. Playsuits and strapless dresses will sit alongside turquoise and spearmint leather jackets. Indies welcomed the change in direction for womenswear, including men’s and women’s young fashion indie Enfin in Douglas, Isle of Man, whose best-selling brand is Superdry across both menswear and womenswear.
“I’ll definitely buy into it,” says assistant manager Mark Steffan. “Superdry has been steady for us – obviously we’re going through a financial downturn but it’s doing well.”
Another indie that will order the spring 13 womenswear collection is young fashion retailer DB3 in Bolton, Lancashire. Owner Alan Tattersall welcomed the move, particularly as “it still feels like it’s a [mainly] men’s brand that sells women’s”.
Superdry is also jazzing up its womenswear category through a tie-up with British tailor Timothy Everest to create a suiting collaboration for women, following on from the success of a men’s suiting line in collaboration with Timothy Everest earlier this year.
Analysts have also supported the focus on womenswear. “I have very high hopes for the range,” says Bubb. “From the way womenswear looked, it wasn’t clear that it was womenswear.”
However, Sarah Peters, lead analyst at Verdict Research, warns that the “feminine” style should not deviate too much from the brand’s original handwriting. “They haven’t done a lot in womenswear but it needs to be very careful about what it’s trying to be. It shouldn’t have a different personality; it needs to have the same brand image.”
While analysts may have fallen out of love with Superdry, it appears stockists haven’t – the brand is still regularly voted one of the top 10 young fashion brands within Drapers’ Indie Index and all of the young fashion indies Drapers spoke to were still championing the brand.
Chris Roche, owner of young fashion indie Ciren Jeans in Cirencester, says his shop is “banging it out. Everyone is buying it, they can’t do anything wrong. We are in a Superdry bubble,” he says.
Mark Davies, owner of Arena Menswear in Worthing, West Sussex, says with no Superdry store nearby, the indie is in a fortunate position and enjoys strong sales of the brand.
While many have complained about Superdry’s tired look, others are concerned that menswear is making moves to shift away from the heavily branded logos. Davies says when it has tried to do something different before, such as dip dye-effect T-shirts, it hasn’t been successful – while its “classic logo” styles continue to sell well.
What should also help SuperGroup focus on product is the axing of its Cult fascia and the conversion of 20 stores into Superdry shops before Christmas. The move wasn’t a surprise given that the brand had made clear on previous occasions it would not be using Cult to launch a new brand, says retail analyst Matthew McEachran of Singer Capital Markets.
Industry experts feel all of these factors are good indicators for a return to SuperGroup’s former super self, although Peters warns that the business still needs to slow down. “It grew really quickly and its infrastructure didn’t keep up with its expansion. It needs to consolidate and focus on its products and do it well. There’s always a danger it can expand too quickly so it needs to tread carefully.”
As Pritchard says: “While the brand is in decent health and the core of the business is being righted, we won’t go overboard in terms of expectations, but early signs from the new management squad are most encouraging.”
Story in Numbers
4.7% - Decline in full-year underlying profit to £42.8m for year to April 29, 2012
31.9% - Rise in gross revenue, which soared to £313.8m during the same period
10% - Proportion of group sales that come from online
26 - Standalone stores opened in the UK and Europe during year to April 29