Superdry today warned that its full-year profits would be lower than expected, while Shoe Zone said its would be higher than expected. One interesting difference between the two is that Shoe Zone is seeing sales in its stores rise, while sales at Superdry’s own stores are expected to fall in the full-year – highlighting the continued importance of the store to multichannel retailers. Superdry says it’s important to bring online in to the store as part of its digital strategy.
Superdry’s warning today that full-year profits would be £10m lower than previously expected, in the light of unseasonably warm autumn weather and the demise of House of Fraser, also shows that it expects to report falling store sales contrasting with rising online sales in the first half of its 2019 financial year. It expects to show the biggest growth in sales coming via its own websites - where it forecasts growth in the low teens. It expects to see single-digit percentage growth in third-party websites, wholesale and in overall revenue, but in its stores it expects to see revenue decline in the low single digits.
The retailer, a Top50 business in IRUK Top500 research, said it planned to invest in digital – both online and in its stores – as it looks to grow sales. In the second half of 2019 it plans to spend around £5m on brand communication, digitisation and automation as well as product development as part of a diversification and innovation programme that aims to broaden choice for its customers. “The investment in adapting stores for a digital world… continues at pace,” it said in today’s update on trading and financial impacts.
Superdry chief executive Euan Sutherland said the second half of its financial year “presents both risks and opportunities.” He added: “"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.”
Meanwhile, Shoe Zone, a Top100 retailer in IRUK Top500 research, said it had seen strong performance in both its stores and its digital channels.
In a pre-close trading update for the year to September 29, the discount footwear retailer said that it expected to report sales and profits ahead of market expectations. Full-year sales revenues are expected come in at £161m, 1.8% up on the previous year, while pre-tax profits are expected to beat market expectations at more than £11m. The improvement, it says, is driven by stronger sales and profit margins from its spring and summer range, as well as from foreign currency hedging.
Shoe Zone chief executive Nick Davis said: “Our strategy of growth through Big Box expansion and online channels allied with excellence in the operations of the core Shoe Zone estate provides us with a clear path for the future.” In its new financial year the retailer expects to open a further 14 Big Box stores, adding to the 19 it already has in a store estate of 492. The retailer closed 20 stores and opened 16 during the course of the full-year.
Image courtesy of Superdry