SuperGroup, the owner of the Superdry brand and the Cult chain, has reported a 14.7% fall in underlying pre-tax profit, as its announces the axing of its Cult fascia before Christmas.
The young fashion group saw underlying pre-tax profit drop from £50.2m to £42.8m in the year to April 29.
SuperGroup issued a profit warning in April after uncovering maths errors in its forecasting.
It also used the results to announce that it would be closing its Cult operation and converting the 20 shops into Superdry stores, putting the decision down to the growing success of the Superdry brand. The rebranding process will be completed ahead of 2012 Christmas trading.
Sales climbed 31.9% to £313.8m and UK like-for-like sales, including online sales, increased 2% during the year. Group gross profit margin increased by 120 basis points up from 55.8% the previous full-year to 57%.
In its retail division, which includes all Cult and Superdry branded retail outlets in the UK, as well as concessions and its online operation, SuperGroup saw its underlying operating profit slip by 16.1% from £37.8m to £31.7m.
SuperGroup said that this drop could largely be attributed to lost sales arising as a result of operational issues associated with a new Warehouse Management System which it implemented last September. Other factors affecting profit during the year were the impact of cotton prices, changes in the off-price sales mix, and cost increases across distribution and internet marketing.
Despite the drop in profits, sales in its retail division were up by 29.6% to £191.m, driven by the opening of 20 new stores during the year, adding a further 124,000 sq ft of selling space.
In its wholesale division, which includes all international operations whether wholesale, license or franchise arrangements, and SuperGroup Europe, but excludes the internet, SuperGroup reported a 18.2% increase in underlying operating profit up to £25.3m and a 35.7% increase in sales to £122.8m.
SuperGroup chief executive Julian Dunkerton said that wholesale gains were driven by strong international growth but added that it still remains an important part of the company’s business in UK.
“We are being more selective about the partners we want to work with the calculated closing of certain accounts,” he said. “For example we closed a franchise store in Manchester Arndale this year and reopened it as an own store.
“However, we are not closing accounts willy nilly at all. I actually want to work with our wholesale customers to deliver them a better service.”
Dunkerton added that the group would look to further increase the square footage of its retail estate in the UK this year, upsizing its stores in Kingston and Bluewater and that it is also considering opening stores in Nottingham, Leeds and Newcastle.