Superdry pulls out of mainland China store venture with expected £6m write off
Superdry has announced it will take back control of its branded franchise stores in China, effectively pulling its business out of the country for now at a £6m writedown.
The clothing retailer said it has reached “an amicable agreement” with local partner Trendy International to exit their joint venture, leaving Superdry “free to determine how it will trade in China in the future”.
Formed in 2016, the venture has left Superdry with 25 owned and 41 franchise stores in the country.
The move will see the owned stores close by the end of August, while the franchise outlets will end their relationships by the end of the year.
It comes as part of a wider turnaround plan for the struggling company, which current chief executive and founder Julian Dunkerton brought in after taking back control of the firm last year.
Superdry said this part of the turnaround plan had also been sped up by the impact of Covid-19.
In Superdry’s half-year accounts in December, it said one of the biggest risks to the business going forward was “failure to deliver on our growth aspirations in the group’s key future development markets, in particular, China and USA”.
The company expects about £6m to be written off its 2020 accounts as a result, of which half of that was from the first half of this year.
However, Superdry said it does not expect to pay any extra to wind up its operations in the country.
Chief executive Julian Dunkerton said: “I believe that China represents a huge opportunity for Superdry in the longer term.
“As the way people are shopping there changes, it makes sense for us to shift our focus to the growth channels of online and wholesale.
“Combined with the improvements we are making to our product ranges, I am confident that this is the right time for us to take back full control of our brand in China and to reposition our operations in the region to deliver profitable future growth for Superdry.”