Cheltenham-based clothing retailer Superdry has reported revenue decline of 11.3 per cent for the half year to 26 October, from £414.6 million to £367.8 million, reflecting the need to address a number of legacy issues across the business.
However, the company said that its retail sales decline moderated through first half, with Q2 store revenue down 9.4 per cent versus Q1 down 13.9 per cent as key initiatives are implemented, including focussing on full price sales and reducing promotional activity. This is impacting revenue but driving a +3.2%pt increase in store gross margin, it says.
The company said that decisive action is being taken and there are positive indicators of future performance which is underpinning full-year expectations.
In its own stores, Superdry is working through legacy stock whilst trading against periods of significant promotional activity in the prior year. A focus on delivering an improved customer experience and choice, with more fixtures, stock and options have supported the improved Q2 performance, it says. As expected, the full price stance has resulted in a sales decline, but this has been partially offset by an improvement to gross margin.
The sales decline in E-commerce has also slowed as it has begun executing on our growth plan. This includes the injection of new product to increase choice, making legacy options available online, delivering greater personalisation, improving the shopping experience and increasing social media exposure. We are also seeing the benefit to gross margin from our full price stance, although this has been offset by lower margin third party growth.
However its wholesale channel continues to be impacted by the previous retail strategy of heavy discounting and lower quality product. The forward order performance for its Spring Summer 2020 range is more encouraging, as wholesale customers have reacted positively to a full price retail position and improved product design and quality.
Julian Dunkerton, Chief Executive Officer, said: “We are making good progress with the start to our turnaround plan for Superdry, returning the business to its design led roots. We have always said it will take time, but we have a strong team which is working incredibly hard to deliver this plan. I’m genuinely excited by new injection product which has started to land in stores for this peak and even more excited about the new ranges signed off for next year.
“We are moving the business away from a reliance on constant promotions, and while this focus on full price sales has affected revenue in the first half, this is being partially offset by a better gross margin performance. There is good momentum in the business, and I remain confident of returning Superdry to sustainable long-term growth.”