Once-trendy casualwear vendor Superdry’s woes continue as it posts a £85 million loss for the year to April 2019, as shoppers turn away from the brand and a boardroom battle for leadership leaves the retailer rudderless. However, ecommerce could yet save it.
Underlying profit before tax was £41.9 million, significantly below the previous year’s £97.0 million. This lead to a full year statutory loss before tax of £85.4 million, versus prior year profit of £65.3 million.
However, over the full year 2019, stores contributed £373.1 million, a 3.7% fall on last year, while ecommerce revenues grew by 1.6% to £163.7 million.
Julian Dunkerton, Founder and Interim Chief Executive Officer, who reinstalled himself in the post late last year admits that the results are poor, but that it is the continuing effect of the previous management’s strategy. He believes that by focussing back on its core value of being design-led and by looking into expanding its growing ecommerce arm is the way to bring the brand back to health.
“My express intention in returning to the business is to guide the brand that James Holder and I founded, back to its design-led roots,” he says. “This desire is driven by our belief that, together with the wider design team that we had assembled at Superdry, we can return the company to strong revenue growth, restore double-digit EBIT margins and rebuild profitability over a three-year time frame.”
He continues: “We have reversed the previous buyer-led approach to return to being a design-led business; we have re-engaged Super Design Lab and our exceptional internal creative teams; we are returning to the quality of product for which the brand previously became famous; we are producing a continuous flow of innovative, brand enhancing product and capsule collections. Critically, we are enhancing and supporting the business by reducing lead times, and producing cutting edge, commercial branded product.”
He adds: “Primarily, Superdry is a brand that retails. As such we are returning the company to the retail basics: placing the consumer at the heart of the design process; taking decisions and acting swiftly; trialling products and ideas, learning quickly, and rolling out the winners; driving cost efficiency to keep the brand lean and agile.”
As part of this, the company is looking at ecommerce, which showed growth across the year. “Superdry continues to be a brand with huge digital potential and ecommerce is likely to be the fastest growing division of our business over the next five years: its high returns and capital light nature will enhance overall returns for shareholders,” says Dunkerton.
“Having re-balanced our capital investment towards digital channels, we have a dynamic rolling programme of enhancements, each of which improves the customer experience. By adding a far greater degree of social media to the mix, we can expand the range and personalise what we put in front of customers.”
As part of this, the company is redesigning its website, making the navigation-to-basket easier and quicker and enhance and improve overall appearance and the digital consumer experience in order to increase conversion rates.
“When I first returned at the beginning of April 2019, there was a large amount of stock available in our warehouses but not accessible to customers,” he says. “By releasing this stock, it will potentially more than double the choice online. This has moved us from a potential of 60,000 SKUs online in early spring to a potential of 140,000 SKUs by the end of the summer. This stock that had previously been in a warehouse has now been achieving full price sales. We have been in the process of removing all promotional activity in outlets and building gross margin. “
Another quick win, believes, Dunkerton, has been immediately rectifying the October jackets proposition by creating a commercial range that will flow into all channels.
“I have been committed to creating products that appeal to more clearly defined demographics, by keeping consumer tastes and fashions central to the design process, and producing great products, accordingly,” he says. “We have been setting up a fast response graphics programme with unlimited potential for newness from September 2019 onwards. This is key for us as it enables us to create products incredibly quickly. The online channel has to drop newness every week allowing us to replace a discount message with the constant newness is fundamental for any premium brand.”
These changes will energise the Superdry brand across digital channels, says the company, and it also pledges to adapt its physical stores to reflect any new information, another advantage that Dunkerton says he has over pure play ecommerce retailers.
However, not everyone is convinced that any of this will work to save Superdry. CityIndex senior analyst Fiona Cincotta, warns: “Let’s face it: Superdry just isn’t very cool anymore, leaving it to compete with fast fashion chains offering reasonably stylish clothing at a fraction of the price. Unfortunately for Superdry, reclaiming one’s cool in the fickle world of fashion is no easy task. The demise of surfwear retailer Billabong offers a lesson in just how hard it is to resuscitate a lifestyle brand that has been overstretched by rapid growth and dulled by poor design choices.”