Superdry owner SuperGroup reveals 54% increase in half-year profits
The owner of Superdry has revealed a 54% leap in half-year profits and reassured over its Christmas trading plans following fears that mild winter weather had forced it to slash prices.
SuperGroup - famous for its hoodie tops and T-shirts - saw shares bounce back by 10%, clawing back some of the 13.5% plunge seen on Tuesday after a broker said unseasonably warm weather and increased competition had seen the retailer launch unplanned promotions to shift stock.
The clothing retailer, which has recently teamed up with Luther and The Wire actor Idris Elba, said underlying profits rose to £19.3 million in the six months to October 24, up from £12.5 million a year earlier.
On a bottom line basis, profits fell by a third to £11.5 million due in part to start-up losses of its new North American business.
SuperGroup also cut its earnings outlook for the US division, which it expects to remain loss-making until 2017.
But chief executive Euan Sutherland - the former boss at the Co-op, who took the top job in October last year - hailed a robust first half.
He said: " With a successful first half completed, the business is well placed for the significant peak trading period."
He added: "Whilst comparatives in the second half are more challenging, the development of Superdry into a global lifestyle brand is proceeding with pace."
The surge in half-year profits came as SuperGroup delivered a 17% rise in like-for-like retail sales, against a 4.1% fall a year earlier when sales were hit by a mild autumn.
But there are signs that a mild winter so far this year is forcing retailers into heavy discounting, with official inflation figures on Tuesday showing a record fall in clothing and footwear prices last month.
The Office for National Statistics said the p rice of clothing and footwear fell by 0.1% between October and November - the first time they have dropped month on month in November since ONS records started in 1996.
Liberum, which sparked SuperGroup's share price falls on Tuesday after it downgraded the stock, said the interim results were strong, but added a note of caution.
Analysts at the broker said: "As expected, interims are strong with pre-tax profit up 54%, but the second half drives 75% of full-year profit so there is little room for error.
"We believe conditions are tougher on the high street with more competition driven by excess inventory."
Investec retail expert Kate Calvert brushed aside the fears, saying: "A strong first half demonstrates the good progress made to date across the group."
Supergroup said half-year revenues jumped 22.4% to £254.9 million in a trading update earlier this month, as the retailer launched the autumn/winter 250-piece collection with Elba , who made his name in the cult US crime drama The Wire.
Elba, who also stars as rogue UK detective Luther, helped design the clothes alongside the firm's co-founders James Holder and Julian Dunkerton.
SuperGroup started life as a market stall run by Mr Dunkerton in Cheltenham in 1985, but now operates more than 130 stores in the UK and Europe.
The retailer has seen plenty of change over the last 18 months.
Mr Sutherland last year replaced Mr Dunkerton as chief executive, who moved to the newly created role of product and brand director. The move was aimed at boosting the operational capabilities of the business.
A former rising star of the stock market, the company has been no stranger to profit warnings in recent years.
The retailer warned that its profit would be at the lower end of expectations in May last year because of heavy discounting by rivals, a late Easter and a lack of spring stock.