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Superdry posts half-year loss – but says it is seeing results from cross-channel ‘reset’

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Superdry posts half-year loss – but says it is seeing results from cross-channel ‘reset’

Superdry today posted falling half-year sales and a pre-tax loss – but said Black Friday had been its biggest online trading day ever, as its cross-channel ’reset’ continues.

 

The fashion retailer reported total group revenue of £369.1m in the six months to October 26, down by 11% on the same time last year. Retail sales of £215.1m were down by 11.4% on last year, with online sales down by 10.7% to £215.1m, while wholesale brought in £154m (-10.4%). At the bottom line, Superdry reported a pre-tax loss of £4.2m, after one-off costs and accounting changes but primarily, it said as a result of trading performance. That’s down from a profit of £26.4m last year.

 

Superdry, ranked Top100 in IRUK Top500 research, said that the fall in sales had come as it addressed legacy issues. It said the decline in retail sales improved between the first and second quarters of the year, including in store. Its focus on full-price rather than discounted sales means that gross margins improved by +250 base percentage points. But third quarter sales had been more encouraging, as the retailer saw its biggest Black Friday yet – its strongest online sales day ever. The retailer said it had sent more than 500,000 packages from its distribution centres around the world on Black Friday without disruption and while reducing the cost per unit by 20%.

 

Julian Dunkerton, chief executive of Superdry – who has this year returned to lead the company he founded – said: “At this halfway point in our financial year, I am pleased with the progress we have made to comprehensively reset Superdry. We’re doing this through our product and brand, our physical and digital retail operations and a renewed focus on the retailing basics.

 

“We are only eight months into a process that will take two to three years, but I have great confidence in the strength of our new executive leadership team. I am also pleased with the trajectory of performance we have seen from Q1 to Q2 and subsequently into our peak trading period, which gave us our biggest online trading day ever. However, we remain cautious about the challenging market conditions over the peak trading period.”


Resetting the cross-channel customer journey

Superdry’s cross-channel reset is seeing more stock added to stores (+3%) while doubling the range available online. At the same time it has moved back from discounting in a move that is expected to protect both its profit margins and its brand and to help it rebuild wholesale relationships. Discounting, it said, would only be used for clearance in two end-of-season sales and during Black Friday. At the same time it has renegotiated store rents, cutting them by an average of 30% across its first six stores.

 

Online improvements have included ‘refreshed’ website pages, and a new fit analytics tool. It has fulfilled more than 10,000 online orders in-store following the introduction of in-store fulfilment to 20 stores. That represents about 5% of online orders. “This allows the same item to be available to both physical and online customers, providing an additional route to clear aged and broken lines,” said Superdry in the statement. Paperless returns are set to make that part of the aftersales process more efficient, it added.

 

Superdry has also increased its use of third-party websites Zalando, Next and ShopDirect in order to put its product before new customers, and it is engaging with existing and potential customers over social media. It worked with influencers who had a combined reach of 2.5m Instagram followers to promise its autumn/winter 2019 range. It said that a social media and You Tube-focused advertising approach had driven a three-fold increase in online traffic from social as well as associated sales through the platforms.

 

Superdry is taking a similar approach to review and reset operations in its US and Chinese markets.

 

Image courtesy of Superdry

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