Superdry issues profit warning as it ‘fails to resonate with consumers’

Superdry has released woeful Christmas results with a sales slump that has forced the retailer to revise its underlying pre-tax profit projection from £41.9 million to be between nil and £10 million for the current year.

Superdry has claimed the decline in revenue across all channels is down to its focus on a full-price stance, subdued consumer demand and shortages of some of its better-selling products as well as timing issues. During a period of transformation, some hiccups are to be expected, however, problems such as timing issues and failures in inventory management indicate that CEO Julian Dunkerton has not yet been able to significantly impact the product proposition and in turn, the sales performance.

Investors were spooked by the disappointing results with the share price down 16 percent on Friday morning in London trading.

There remains an overarching emphasis on returning to full price sales alongside revitalizing the product range but  Superdry must focus on speeding up the implementation of its ‘new design philosophy’ which it announced will not have full impact until Autumn/Winter 2020.  While the product offer is being addressed, given the speed of degradation of the ‘old philosophy’ stock, the retailer must place greater urgency on its design transformation strategy otherwise it risks losing further market share to more nimble competitors.

One example of those is JD Sports which has gone from strength to strength through constant evolution, implementing an effective merchandising strategy that resonates with its target audience while also partnering up with prominent influencers, helping to keep the brand relevant.

Superdry must now ensure it uses the expertise of its new creative head, ex-Nike executive Phil Dickenson, to help rapidly restore its style credentials so that it can justify its full-price proposition and breathe some trend-focus into its brand to regain its long lost “cool-factor”.