Struggling Superdry has swung into the red, reporting an £85.4m annual loss and warning it expects revenues to fall in the current “reset” year.
The fashion retailer, which had issued three profit warnings in the run-up to a delayed set of figures for the year to 27 April, has endured a tumultuous time in terms of trading and in the boardroom.
A bitter row between management and co-founder Julian Dunkerton over Superdry’s direction resulted in a shareholder vote that saw him swept back in April – prompting the executive leadership team to quit.
He had warned when he took the job as interim chief executive in April that his turnaround plans, chiefly restoring a design-led culture, would take time – especially in the tough retail environment that has seen consumers shy away from the high street.
The company reported flat group revenue for the past year of £872m – with a “poor performance” in the second half across its business dragging on the figure. Stores sales were down almost 4%.
Underlying pre-tax profits – reflecting day-to-day trading profitability – was 57% lower on the previous 12 months at £42m and hurt by discounting to attract shoppers.
It blamed its bottom line loss of £85.4m on a previously announced non-cash charge of almost £130m relating to onerous leases and other impairments.
Superdry said it did not see any great recovery ahead.
The company warned: “Despite early, albeit small positive results from new initiatives across the retail channel, we expect group revenue to show a slight decline in FY20, particularly in the first half, as we rebalance promotional activity and strengthen the brand.
“Global retail markets are expected to remain highly competitive and the consumer outlook continues to be uncertain, including the continued uncertainty of the impact of Brexit
“Given the scale of the trading downturn in FY19 and the lead times required to rectify the product range and proposition, management view FY20 as a year of reset.”
Superdry, which has made progress on appointing new members of its board, is still hunting a full-time chief executive.
Mr Dunkerton told investors: “Although we are only three months in, our initiatives are gaining some early traction, and I am confident we are doing the right things to ensure that over time Superdry will return to strong profitable growth.”
Shares fell 7% at the open – building on losses earlier in the year which left Superdry with a market value just below £370m. That is 80% down on their peak of 2018.
Neil Wilson, chief market analyst at markets.com, said: “FY 2020 is seen as a year of ‘reset’. So, the turnaround is only just beginning and there could be worse to come in the near term.
“Shareholders will have to tough this out for a while yet. It’s been a rough year for the brand and things will not be remedied overnight – as Mr Dunkerton admits.
“Shares are already on the deck though, so if the turnaround works then it could be a more positive 2021. A while to wait though.”