Superdry Loses Its Cool as Heatwave Hits Sales
Shares fall 20% after clothing brand said it expects profit to be hit by about $13.15 million
Shares in Superdry PLC SEPGY -1.96% plunged more than 20% on Monday after the British clothing brand warned hot weather in Europe and the U.S. had hit demand for its jackets and sweats.
The brand, known for its eponymous logo accompanied by Japanese characters, generates 45% of its annual sales from cold weather clothing. But it said unseasonably hot weather in the U.K., continental Europe and on the East Coast of the U.S. over the summer and autumn so far had significantly affected demand.
Superdry said it expects profit to be hit by about £10 million ($13.15 million) because of the warm weather. It said full-year profit would now be heavily influenced by its performance in the second half of the fiscal year.
The company also said Monday that currency hedging had failed to provide the protection expected, resulting in around £8 million of additional foreign-exchange costs.
The double financial hit prompted some investors to sell, sending Superdry’s stock to fall to its lowest level since January 2015. By early afternoon in Europe, its shares had recovered slightly to trade down 19.5%. The stock is down by more than half over the past 12 months.
“Superdry’s weather-related profit warning could raise significant questions over the true strength of the retailer’s brand,” said Russ Mould of broker AJ Bell. “Superdry must deliver a solid performance if it is to win over doubters.”
The company said it is seeking to address its reliance on autumn and winter clothing by expanding into dresses, skirts and women’s tops. It also said it was moving into new market segments like sport products, giving its global consumers broader choices.
Superdry last month recruited former Tommy Hilfiger womenswear chief, Brigitte Danielmeyer, to be its chief product officer with the aim of getting more out its in-house design teams. It also launched Superdry Preview, a series of fast-fashion ranges aimed at younger, more fashion-driven customers.
“Superdry is a strong brand with significant growth opportunities... but we are not immune to the challenges presented by this extraordinary period of unseasonably hot weather,” said Chief Executive Euan Sutherland.
Founded in 1985 in the English spa town of Cheltenham under the name Cult Clothing, the company launched its Superdry brand in 2003. The brand, which has 246 stores, including 30 in the U.S., has proved particularly popular with shoppers in their teens and 20s.
For the fiscal year ended April, the company reported group revenue of £872 million and net profit of £53.3 million.