Superdry profits plunged 49% in its first half as the fashion retailer warns on full-year earnings and steps up its transformation plan.
The retailer said the warm weather had continued through November and into December, its two biggest trading months.
This has led to a £11m hit on profits in November and Superdry expects a similar dent in December if trading conditions do not improve.
The retailer acknowledged that its reliance on cold weather products and a “lack of innovation” in some of its core categories led to sales coming under pressure.
The retailer vowed to “intensify” its transformation plan that kicked off in April. Its focus is “re-energising product” and “evolving the brand”.
Superdry said it would now also review its store portfolio and the cost structure of the business.
It wants to make gross cost savings of at least £50m by 2022 and is is looking into store closures, right-sizing, relocations and rent renegotiations in a property review that will complete in March next year. It is also reducing capex spend by £35m to £40m and is focusing on digital investments.
The poor performance comes as Superdry co-founder Julian Dunkerton, who is vying to return to the business, took a swipe at the retailer’s strategy this week.
In a City stockbroker note, Dunkerton told Wayne Brown, an analyst at broker Liberum and former Superdry head of investor relations, that he quit his board position at the retailer because he could not “put his name to the strategy”, which centred on reducing the number of products it sells.
He said: “The interaction between stores and the internet is going to be so fundamental to the future of retail. Consumers have adopted the internet and, by doing so, have moved away from the limitations of the high street and towards a world of unlimited choice.
“The premise here is if one does not participate in this world, you will get left behind.”
Dunkerton had previously warned Superdry, of which he still holds 18% of shares, was “on the wrong path”, and has said he is willing to return to the retailer “in any capacity” in order to turn it around.
In order to do this, Dunkerton is understood to have had meetings with Superdry chairman Peter Bamford, several of the retailer’s top 10 institutional investors, as well as shareholders.
Superdry boss Euan Sutherland said Superdry had a “difficult first half” but said his transformation programme would ”reset the business and address the legacy issues we face, particularly in product mix and range”.
He said: ”Superdry is responding to its internal challenges as well as a changing world and changing consumers. Our comprehensive transformation will ensure Superdry is well positioned as we optimise our routes to market and make our business more efficient.
We are confident that our transformation programme combined with the underlying operational strengths of the business will deliver a return to higher levels of growth and profitability while realising geographic expansion opportunities and leveraging our multi-channel operating model to serve customers in whichever way suits them best.”
In product, Superdry is seeking to add more innovation to its core products and increase participation from newer, fast-growing categories. It will also pursue new opportunities such as kidswear, which will be launched in autumn 2019.
The retailer is also seeking to strengthen Superdry’s brand positioning with targeted investment, “supercharging” marketing communications and refreshing its approach on social media.
It is also accelerating its investment on “capital light channels”, including both owned and third party ecommerce sites and wholesale, to drive sales growth. It has identified “significant opportunities” in wholesale-led growth in the US and China, which it believes can add £400m of sales by 2022.
The retailer is also looking to drive margin improvement through sourcing, supply chain and automation efficiencies.