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Superdry full-price strategy hits sales but profit margins surge

The intact price tags have expectedly hit half-year group revenue, which dropped 11% year-on-year to £368mln, although store gross margin was up

Superdry PLC - Superdry stops sales galore as part of new strategy
The firm said it is “confident” to see the benefits of the reset phase in the second half

Superdry PLC (LON:SDRY) is undergoing a reset phase to get “full control of the product and costs”, which saw revenue dropping after a shift in strategy under returning boss Julian Dunkerton.

In a pre-close trading statement, the faux-Japanese fashion brand said the programme will last between two and three years, including a design-led approach and a shift away from reliance on constant promotions.

READ: Superdry founder Julian Dunkerton holds onto CEO role, for now

The intact price tags have hit half-year group revenue, as expected, with an 11% year-on-year drop to £368mln, although store gross profit margin gained 320 basis points to 71%.

Cheltenham-based Superdry said it is “confident” of seeing the benefits from the reset phase in the second half, although it remains “cautious” about the challenging market conditions over the peak trading period.

“There is good momentum in the business, and I remain confident of returning Superdry to sustainable long-term growth,” said chief executive and co-founder Dunkerton in a release.

Dunkerton, who forced his way back onto the board earlier this year following a 65% share price plunge over 12 months, is set to remain in the post until April 2021.

Analysts at Liberum said in a note that half-year loss should not detract from the forecast recovery beginning from the second half onwards, with potential to double profit over the next two years.

"H1 is a 'clean-up' period as historic strategic mis-steps are addressed and there is no change to our forecast of an H1 underlying PBT loss of circa £7m."

Shares in the company were up 6% to 451.28p in early morning trades.

Quick facts: Superdry PLC

Price: 285.16 GBX

LSE:SDRY
Market: LSE
Market Cap: £233.92 m
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