Underlying pre-tax profits at young fashion group SuperGroup, which owns trendy brand Superdry, dropped 14.7% in the year to April 29, to £42.8m.
The drop, which Supergroup warned of in April, was down to a glitch of its new warehouse management system. The retailer said that the impact of cotton prices, changes in the off-price sales mix, and cost increases across distribution and internet marketing also contributed to the hit on profits.
Sales climbed 31.9% to £313.8m and that UK like-for-likes, including internet sales, edged up 2% during the year. Group gross profit margin increased by 120 basis points up from 55.8% the previous full-year to 57%.
In its retail division, which includes all Cult and Superdry outlets, as well as concessions and the internet, the young fashion group saw its underlying operating profit slip by 16.1% from £37.8m to £31.7m.
SuperGroup chief executive Julian Dunkerton said: “Whilst sales have continued to grow substantially, this has been a disappointing year for the group. We have faced challenges brought about by the rapid growth of our business which have been compounded by the volatile and adverse conditions experienced by all fashion retailers. Profits have, therefore, fallen short of expectations.”
Dunkerton said the strengthened management team, which includes chief operating officer Susanne Given and chief financial officer Shaun Wills, was improving its operational capability.
Despite the drop in profits, sales in its retail division were up by 29.6% to £191.m, driven by the opening of 20 new stores during the year, adding a further 124,000 sq ft of selling space.
The group also said that owing to the growing success of the Superdry brand, the management has taken the decision to rebrand its 20 Cult stores as Superdry.
The rebranding process will be completed ahead of 2012 Christmas trading.
Dunkerton added that the group would look to further increase the square footage of its retail estate in the UK this year, upsizing its stores in Kingston and Bluewater and that it is also considering opening stores in Nottingham, Leeds and Newcastle.