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Premium apparel brand blames balmy weather for profits woe, but is the brand becoming tired?
Thursday 18 Oct 2018 Author: James Crux

Branded fashion retailer and wholesaler Superdry (SDRY) bombed on a full year profit warning (15 Oct) blamed on unseasonably hot summer and autumn weather, a hit from FX hedging losses and the downfall of partner House of Fraser.

Yet the Superdry branded t-shirts-to-jackets seller’s shares, now trading at a lowly 784.5p, were weak ahead of the warning, which may resurrect concerns over the longevity of the brand and its faux-Japanese styling.

Heavily dependent on cold weather categories, usually delivering 70-75% of its annual profit during the second half of the financial year, Superdry is the latest retailer to lament the seemingly unending warm weather.

The balmy conditions that have continued into October, combined with weaker consumer confidence, have crimped the Cheltenham-headquartered premium clothing brand’s performance.

Concerns over declining retail like-for-like sales are weighing on the share price and Superdry concedes its first half owned store sales are expected to show a low single digit decline amid subdued footfall and competitive industry conditions.

Peel Hunt insists ‘overall brand performance is not in question and Superdry has enjoyed stronger sales on the few weather appropriate days in September’, while sticking with its ‘buy’ rating.

Nevertheless, the broker has downgraded its 2019 pre-tax profit estimate by a whopping £25m to £87m, conceding ‘investors will need to see an acceleration in performance over the peak (period) to re-instil confidence in execution'. (JC)

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