Superdry PLC (LSE:SDRY) shares fell nearly 17% after it issued a profit warning due to a “challenging environment” and said it is considering turning to the market to raise cash.
The company withdrew its existing profit guidance of “broadly breakeven” for the financial year, according to a statement, prompting shares to fall 16.9% to 88.75p.
To further strengthen its balance sheet, Superdry confirmed it is considering an equity raise of up to 20% of its issued share capital.
Revenue for full-year 2023 is now expected in the range of £615mln to £635mln due to slower-than-expected retail sales growth and challenging performances from its retail partners.
Slower-than-expected sales, the London-listed company said, can be attributed to factors outside its control, such as the cost-of-living crisis and poor weather hitting demand for its spring-summer collection.
“The Superdry brand continues to evolve but there is no doubt that the market conditions we face are challenging, compounded by the issues we have previously disclosed and are working to address in Wholesale,” said founder and chief executive Julian Dunkerton.
As part of the group’s turnaround plan, Superdry said it has identified cost savings of over £35mln to be realised by the end of 2024, which will be achieved through estate optimisation, logistics, distribution savings, better procurement and range reductions.
Bantry Bay, Superdry’s lender, has indicated support for the company’s disposal of IP assets for £34mln in certain countries in the Asia Pacific while increasing the flexibility of the existing facility.
“The group is walking down the right path as it tries to achieve long-term cost savings through its store estate and logistics,” Hargreaves Lansdown analyst Sophie Lund-Yates said.
“But cost savings can only carry you so far. At some point organic demand needs to carry the mantle.”
Liberum reiterated a ‘buy’ rating for Superdry meanwhile, claiming its turnaround plan should bring profits, though analysts also cut the retailer’s price target in half to 250p.