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SuperGroup shares fall as half-year like-for-like retail sales slow and margins decline

Margins were hit by higher costs and its store expansion in the six months to October 28
SuperGroup
SuperGroup opened 50 Superdry stores during the period

Superdry owner SuperGroup PLC (LON:SGP) achieved a jump in half-year revenues but shares declined as like-for-like retail sales growth slowed and as margins came under pressure.

Global brand revenue rose 25.2% to £756.3mln in the 26 weeks to October 28 with growth across all its channels, including 12.8% in retail and 34.1% in wholesale revenues.

Weaker pound, higher input costs

The results included a £12mln benefit from a weaker pound, the majority of which came in the first quarter, as the brand has stores in 23 different countries.

On a like-for-like basis, retail sales increased 6.3% following a 12.8% rise the same period a year ago.

During the period, the company increased its floorspace by 15.4% and the number of dedicated Superdry stores rose by 50. Store revenue rose 7.6% to £181.5mln.

However, the expansion, coupled with higher input costs that was not passed onto consumers, is expected to weigh on the group’s margin for the period. Margins were also hit by investments to reduce inventory, partially offset by not repeating promotions trialled last year.

Superdry predicts gross margin will fall by 170 basis points year-on-year.

READ: SuperGroup shares jump as the Superdry owner hikes full year dividend

Half-year underlying profit, after distribution centre migration costs and development market investment, is expected to be in the range of £25mln to £26mln.

For the full year, underlying full year profit before taxation is anticipated to be line with market forecasts of £97.9mln.

"Our focus is on executing against the clear growth opportunities we have identified. We have a clear brand positioning, a disruptive multi-channel approach and a growing culture of operational excellence," said chief executive Euan Sutherland.

Shares declined 1.35% to 1,823p. 

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SuperGroup Timeline

Article
January 12 2017

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