Despite most of the UK and Europe being covered in snow in recent weeks, SuperDry PLC (LON:SDRY) has said it is still too warm for people to buy its zip-riddled jackets.
The company has frequently bemoaned the mild weather over the past year, during which it has seen its share price dive by more than 70% following a string of profit warnings.
READ: Superdry plunges after profit warning
SuperDry is particularly sensitive to climate as its jackets, hoodies and sweats make up the bulk of its annual sales.
Revenue dropped again in the third quarter, slipping 1.5% to £269.3mln (Q3 18: £273.3mln). In-store sales were particularly weak, down 8.5% year-on-year, but SuperDry is even struggling online.
Although it is keen to stress that the “unseasonably warm” weather is largely to blame, the company acknowledges that it has become too reliant on winterwear while there hasn’t been enough innovation in some of its core clothing categories.
SuperDry is looking to address these issues through its transformation programme, which will see it revamp its stores and website, launch new clothing ranges and embark a cost-cutting strategy that will see it save at least £50mln a year by 2022.
‘Subdued’
“Superdry's performance has remained subdued during quarter three,” said chief executive Euan Sutherland.
“We continued to be impacted by the ongoing product mix and relevance issues we have previously highlighted and by the lack, until the end of quarter three and the start of quarter four, of any prolonged period of cold weather in our key markets.”
“We are pleased with the early progress being made with our transformation programme, designed to reset the business and deliver a return to higher levels of growth and profitability.”
Liberum pulls no punches
City broker Liberum reckons Superdry is “by far” the worst performer in the branded clothing sector, with analysts wondering “how bad things have to get” before the board starts to take serious action.
“The unseasonably warm weather that hit performance in November and December continued through January, resulting in store sales down more than 8.5% in Q3 and brought YTD average sales per square foot to -11.2%,” read a note to clients on Thursday.
“If this was not bad enough eCommerce sales have now turned negative… which is the worst case scenario in our view.”
Liberum added: “The investment case has shifted in 18 months from growth to cost savings and a company that was achieving the highest rates of growth in the industry is now seeing sales fall dramatically.
“We are cutting FY19E forecasts today by 14% and place our numbers at the bottom of the consensus range.”
Shares opened lower on Thursday before edging up 1.6% to 517p. This time last year, they were changing hands for almost 1,800p.