Superdry revenue rises, but margins narrow on wholesale struggles

(Sharecast News) - Fashion retailer Superdry reported a mixed performance in its full-year results on Friday, with group revenue increasing 2.1% to £622.5m, as the brand continued its recovery efforts. The company put the revenue boost down to robust retail growth of 14.6%, largely compensating for a 19.1% decline in the wholesale business.

It said the wholesale segment continued to face challenges, due to a more cautious outlook from partners.

The faux-Japanese brand said it saw a promising recovery in store revenues, up 14.7% in the 52 weeks ended 29 April compared to the prior year, particularly in the US and the UK.

Superdry also attributed strong peak holiday sales to this revenue uptick.

E-commerce was another bright spot, with revenue rising 14.3%, buoyed by successful third-party site performance and a record-breaking Black Friday event.

Despite the rise in revenue, the company reported a decline in gross margin by 3.2 percentage points to 52.8%.

The contraction was put down to the ongoing clearance of aged stock.

Additionally, the return to regular rent and business rates, along with a sluggish recovery in the wholesale segment, contributed to an adjusted loss before tax of £21.7m for the year.

Superdry reported a statutory loss after tax of £148.1m, largely due to non-cash impairments and other adjustments.

The company said it exceeded its sustainability targets by incorporating 62% sustainably-sourced materials into its garments, significantly surpassing the 47% goal.

On the financial front, the company said it also took several steps to improve its balance sheet, including an intellectual property sale and an equity raise, which were expected to yield around £45m after the fiscal year end.

A cost-saving programme, intended to deliver £35m in savings by the 2024 financial year, was also announced.

The retailer said it secured loan facilities with Bantry Bay Capital for up to £80m during the fiscal year, and agreed to a further £25m facility with Hilco Capital after the year ended.

"This has been a difficult year for the business and the market conditions have been extremely challenging, especially in Wholesale," said founder and chief executive officer Julian Dunkerton.

"We've looked closely at how we operate and have taken decisive actions to improve our position, rebuild liquidity, and recapitalise our balance sheet, through careful preservation of cash and a re-engineered cost base.

"The good news is that despite the external turbulence, the brand is in sound health and has momentum."

Dunkerton said stores and e-commerce delivered a strong sales performance, adding that he was "excited" by the brand's collections for the autumn-winter 2023 season.

"While wholesale remains very challenging, I believe the new team in place will recover this business in the medium-term.

"I'm really excited by our new partnership in Asia, finalised after year-end, which not only has helped rebuild our balance sheet but will ensure Superdry can achieve its potential as a truly global brand."

The start to the new financial year had, however, been tough, Julian Dunkerton added, not helped by unseasonal weather and highly promotional markets, with the CEO not expecting the consumer environment to become any easier in the short-term.

"However, the actions we have taken and continue to take to ensure the health of the business, give me more confidence as we look into the future."

Reporting by Josh White for Sharecast.com.