Superdry to expand into kidswear, but company reports difficult half year trading

Superdry

Superdry, the Global Digital Brand, who are head quartered in Cheltenham, is set to enter the fast-growing $160 bn-a-year kidswear market, launching Superdry Kids for the autumn/winter season in 2019. But the company has today also reported a difficult first half interim results for the 26 weeks ended 27 October 2018.

  Global brand revenue up 6.4% to £831.8m (1H18: £781.6m

  Group revenue up 3.1% to £414.6m (1H18: £402.0m)

  Underlying profit before income tax down 49.0% to £12.9m (1H18: £25.3m),

Euan Sutherland, Superdry Chief Executive Officer, said: “Superdry had a difficult first half, impacted by unseasonably warm weather across our major markets, a consumer economy that is increasingly discount driven and the issues we are addressing in product mix and range.”

Unseasonably warm weather continued through November and into December (Superdry’s two biggest trading months in the year) across all of its key markets. Given Superdry’s reliance on cold weather related product continues and a lack of innovation in some of its core categories, sales have remained under pressure despite a strong performance in the Black Friday week. This has resulted in an adverse profit impact of around £11 million in November and the company expects a potentially similar profit impact in December if trading conditions do not improve.

There is still considerable uncertainty in terms of the weather outlook, the changing shape of consumer behaviour in the peak trading period and the impact of wider economic and political uncertainty. Reflecting those impacts and the uncertainty in the remainder of the financial year the company expects underlying profit before tax to be in the range of £55m to £70m.

Euan added: “In the spring of this year we started an 18-month product innovation and diversification programme. This will in-crease choice for consumers around the world and address the current over-reliance on jackets and sweats. We are accelerating into new categories and are particularly excited by the upcoming launch of Superdry Kids. At the same time we are evolving the brand through targeted investment. In everything we do we will build on Superdry’s heritage of offering exceptional quality and design detail at outstanding value.

“Superdry is a strong brand and has strong operational capabilities. We are focused on an intensified transformation programme to reset the business and address the legacy issues we face, particularly in product mix and range.

“Superdry is responding to its internal challenges as well as a changing world and changing consumers. Our comprehensive transformation will ensure Superdry is well positioned as we optimise our routes to market and make our business more efficient. We are confident that our transformation programme combined with the underlying operational strengths of the business will deliver a return to higher levels of growth and profitability while realising geographic expansion opportunities and leveraging our multi-channel operating model to serve customers in which- ever way suits them best.”

Superdry’s new kids range will offer clothing and accessories for six to 12-year-olds. The key categories will be T-shirts, jackets and sweats for both sexes, with the addition of polos and joggers for boys and dresses and leggings for girls. The first Superdry Kids ranges will offer around 200 different items of clothing.

Superdry has based the launch on detailed consumer analysis, including the findings that older children already access the ranges through smaller adult sizes and that internet searches show significant demand for kids wear from the business’s existing customer base.

The ranges will be sold online and in Superdry stores around the world and will also be distributed through wholesale channels. Over time, in line with its evolving strategy, the Group will consider stand-alone kidswear stores under franchise, pop-up shops and shop-in-shops.

The move is part of Superdry’s accelerated Global Digital Brand strategy, under which it launches new product extensions. Previous brand extensions have included new ranges such as Superdry Snow (2014), Superdry Sport (2015); together Snow and Sport is now an £83m a year business. Already this year the business has announced the development of Superdry Edit, a curated range of premium product for women and men with a discrete brand presence, which launches in Spring 2019.