Superdry today pointed to ecommerce and social media growth in full-year results in which it also wrote down the value of its stores and reported revenues down by 19% and a bottom-line loss of £166.9m. It says social distancing in store and investment in brand and digital infrastructure are all likely to mean shoppers continue to shift their purchases online.
Superdry, which is currently ranked Top50 in RXUK Top500 research, reported sales of £704.4m in the 52 weeks to April 25, down by 19.2% from £871.7m a year earlier. Superdry said the fall in sales came both as a result of a planned move away from discounting towards full-price sales, and as a result of Covid-19. The retailer’s entire store estate was closed from March 22 until the end of its financial year, which fell more than a month later on April 25.
Full-year underlying pre-tax losses came in at £41.8m, down from a profit of £38m a year earlier. But at the bottom line, after one-off costs, pre-tax losses of £166.9m were almost double the losses of £89.3m reported last time. Those one-off costs totalled £125.1m and included a £136.8m write down in the value of its stores. The revaluation of the stores came as the retailer moved to the new IFRS 16 accounting system, but was offset by a £287.3m increase in its ‘right of use’ assets.
Superdry chief executive Julian Dunkerton said: “While our underlying profit has been impacted by trading performance during the year, including Covid-19 related store closures, I am particularly pleased by how strongly ecommerce has performed, with FY21 first quarter revenues nearly doubling year-on-year. This has been complemented by our increased digital consumer engagement, which helped drive a stronger womenswear mix than we have ever seen before. I’m pleased that we have delivered a good increase in the full price mix, which is up 12pts year-on-year and has had a positive impact on gross margin.”
Superdry closed all of its stores from March 22 in response to Covid-19 lockdowns, and distribution moved online. Ecommerce orders stayed well ahead of the previous year for at least four months. Online sales were up by 112.1% in the five weeks to May 30, when store orders were down by 85.9% and group revenue fell by 36.7%. In the four weeks to June 27, when stores in most countries started to reopen, ecommerce was 126.7% up on the previous year, with store sales down by 54.1% and overall revenue down by 18.1%. However, online sales appear to have normalised in the seven weeks to September 12, when ecommerce was 4.1% ahead of last year, but store sales remained down by 31.4%, and overall revenues were 30.3% down. Summing up the first 20 weeks of the current financial year, online sales were up by 55.3%, store sales down by 48.3% – including a drop of 55.1% in the UK – and group revenue was down by 27%. Wholesale revenues are currently 36% down year-on-year as retail partners faced the same environment.
Superdry scaled back and rescheduled its product orders, with the results that it finished the year with inventory worth £158.7m, a reduction of £28.2m a year on the previous year-end. It also used discounting in order to clear stocks during the lockdown. Superdry went ahead with previous plans to close three of its four US warehouses during the year.
Looking ahead, Superdry says that its design-led strategy remains relevant, and that it will focus on renegotiating rents to return them to profitability, prioritising investment in digital and improving the online customer experience. During the full-year, the retailer grew its social media following by 14% to 3.2m. It said it did so through posting better content and posting more often. Now it plans to use engaging and targeted social media content in influencer-led autumn/winter 2020 digital campaigns. The launch of the AW 2020 season will mark the retailer’s return to full-price selling, with discounting reserved only for Black Friday and end of season events.
Superdry says it hopes to see store sales improve from where they are now, but is not expecting them to return to year-on-year growth this year. However, it is expecting online sales to stay ahead of last year, and says it expects the “most recent ecommerce performance trends to continue over the remainder of the year, benefiting from the continued channel shift as a result of social distancing measures in stores, and from the investments in our brand and digital infrastructure.”