Superdry shares plunge on profit warning blamed on hot weather and foreign exchange
Shares in Superdry plunged this morning after the fashion retailer announced a £23m profit warning, which it blamed on hot weather and foreign exchange problems.
The Cheltenham-based company saw shares drop as much as 20 per cent to 788p following the trading update, published ahead of its half-year results next month.
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Unseasonably hot weather across the UK, Continental Europe and the East Coast of the US was to blame for £10m of the profit warning, Superdry said. The Japanese-inspired brand makes around 45 per cent of annual sales from jackets and sweatpants.
The company also expects an additional £8m hit due to foreign exchange costs, and investment to drive growth in the face of changing consumer behaviour will add an extra £5m cost to the balance sheet.
"Superdry is a strong brand with significant growth opportunities, backed by robust operational capabilities, but we are not immune to the challenges presented by this extraordinary period of unseasonably hot weather," said chief executive Euan Sutherland.
"We are well prepared for peak trading, but the second half of financial year 2019 presents both risks and opportunities. “We continue to focus on delivering efficiencies and cost savings to meet the current challenges and have confidence in our strategy for growth and so are accelerating investments in our future."
There are "significant" opportunities ahead for Superdry, Sutherland said, including market expansion and category extensions.
Russ Mould, investment director at AJ Bell commented: "The company is looking to address this situation by bolstering its offerings in other areas like denim and sportswear but there has to be a risk that fickle shoppers are simply growing tired of its faux-Japanese styling.
“Shares in the company have more than halved this year with weather also fingered as the culprit for weak trading in a May update (this time it was too cold) and the departure of founder Julian Dunkerton in March has also affected investor sentiment.
“Superdry badly needs a spell of solid performance to help win over the doubters.”
Paul Hickman, analyst at Edison Investment Research added: "Superdry has been wrong-footed by warm late summer and autumn conditions, causing a profit impact of some £10m.
"The second half of the year remains critical as this is when 70 to 75 per cent of full-year profit is generated."
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