Weather too hot for Superdry

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Global clothing brand, Superdry, which has its headquarters in Cheltenham, has warned that the unseasonally warm weather will hit its full-year financial performance.

The importance of Superdry’s cold weather product categories and the normal profit cycle of its business (Superdry usually delivers 70-75% of full-year profit during the second half of its financial year) mean that the company’s full-year profit will be heavily influenced by its performance in the second half.

The summer and autumn has so far seen unseasonably hot weather conditions in the UK, Continental Europe and on the East Coast of the USA. These have significantly affected demand for autumn/winter product, particularly sweats and jackets, which account for around 45% of Superdry’s annual sales.

Euan Sutherland, Chief Executive Officer of Superdry, said: “Superdry is a strong brand with significant growth opportunities, backed by robust operational capabilities, but we are not immune to the challenges presented by this extraordinary period of unseasonably hot weather. We are well prepared for peak trading, but the second half of financial year 2019 presents both risks and opportunities.

“We continue to focus on delivering efficiencies and cost savings to meet the current challenges and have confidence in our strategy for growth and so are accelerating investments in our future. There are significant opportunities ahead for Superdry in terms of geographical market expansion, category extensions and growth and the ability to leverage its multi-channel operating model in a digital world to deliver to customers in whichever way suits them best.”

The company’s hedging mechanisms which it put in place have not provided the degree of protection expected. This will lead to around £8 million in additional foreign exchange costs.

Superdry is now five months into its 18-month product diversification and innovation programme to broaden choice for its global consumers, which it says will address this reliance on heavier weight product.  

It is accelerating its expansion into lower participation categories (dresses, skirts, women’s tops and denim) and further extending into new market segments (premium, sport and licensed product ranges) while continuing to maintain strength in its core categories (sweats, jackets and T-shirts) through a focus on more relevant innovation.