Another shock profit warning from Superdry owner SuperGroup, blamed on poor maths, wholesale issues and more shoppers buying its trademark T-shirts and hooded tops at knockdown prices from eBay and discount stores, has sent its shares plummeting.
While the company, whose heavily branded clothes are worn by celebrities including Pippa Middleton, David Beckham and Leonardo DiCaprio, insisted the latest downgrade was caused by one-off or short-term factors, City analysts have lost confidence in the numbers, with one describing the shares as uninvestable.
Most do not believe the brand is broken, pointing to strong spring and summer ranges and a new three-storey flagship store in Regent Street, central London. But fashion experts said SuperGroup, which burst on to the scene in 2004 with a shop in Covent Garden, London, selling US-vintage-style T-shirts, often with Japanese text, needed to raise its game.
“They are not making their collections different on a seasonal basis – one season looks like the next,” said Melanie Rickey, fashion blogger and contributing editor to the magazines Grazia and Pop. “Obviously they have been expanding aggressively, but fashion waits for no man.”
SuperGroup has long been criticised for its logo-heavy T-shirts and polos. Rickey said: “They haven’t even changed the typography. Superdry has a niche appeal which has been very popular, but my feeling is they are less popular now.”
In its third warning on profits since October, the fashion chain said it now expects to make a pre-tax profit of £43m in the year to 29 April, down from £50m forecast in February and the £47m it made last year. Shares in the company, which runs 80 UK stores and 145 international shops, crashed 38% to 351.8p. The group floated in 2010 at 500p, and at one stage the shares reached £18.99.
SuperGroup said “arithmetic errors” meant its profits forecast for the wholesale business was out by £2.5m. There is also a profit shortfall of £2m in the same division as a result of demand for stock from franchisees and wholesale customers coming later than expected, although the bulk of these sales will be pushed into the 2012-13 year. More importantly, a further £2m shortfall was caused by more shoppers buying goods on the eBay clearance site or at discount outlets.
Nick Bubb, an independent retail analyst, called the latest warning a calamity.
John Stevenson, retail analyst at Peel Hunt, advised clients to sell the shares, saying: “Against very weak comparatives last year – we calculate that like-for-like sales fell 8% against a strong clothing market – we view this as a worrying result.”
Operating costs have gone up too, partly linked to the hiring of new executives, but SuperGroup (and the City) hope new finance director Shaun Wills – who starts on Monday – along with Susanne Given in the newly created post of chief operating officer will sort out problems in reporting systems and operational issues.
SuperGroup said retail sales were on target and projections for 2012-13 should not be affected. But house broker Seymour Pierce still cut its forecast to £56m from £64m. Stevenson lowered his forecast even further, to £45m: “With another profit warning that questions management control and market communication, we struggle to see the shares as being investable.”
SuperGroup also issued a profit warning last October, blaming the botched implementation of a warehouse IT system upgrade that left stores short of stock.
Several analysts, including Oriel’s Pritchard and analysts at Singer Capital Markets, who had been buyers of the shares, put their ratings under review.
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