Seven months after the founder of Superdry forced his way back into the fashion business it has reported a steep fall in sales but said its profit margins were starting to recover as it ended widespread discounting.
Sales tumbled by more than 11% in the first half of its financial year as Julian Dunkerton retook the helm and overhauled the retailer, which was running frequent promotions to increase sales. “We are moving the business away from a reliance on constant promotions, and while this focus on full price sales has affected revenue in the first half, this is being partially offset by a better gross margin performance,” he said.
The shares, which plunged from more than £20 to about £4 in 2018, prompting Dunkerton’s effort to get back into the boardroom, gained 6% to £4.50 on the back of the update.
Dunkerton, who was reinstalled as chief executive in April after a bitter boardroom battle that resulted in other directors walking out, said 70% of clothing was sold at full price in the six months to 26 October, up from 52% a year ago. But the impact on the company’s top line was stark, with sales down £47m at £368m as it came up against figures from a year ago that had been bolstered by heavy discounting.
The retailer said it was “cautious about the challenging market conditions over the peak trading period”.
Dunkerton, who started out selling clothes on a Cheltenham market stall, launched Superdry with the designer James Holder in 2003. He has said it will take several years to turn the business around after the company lost its way under the previous management team led by Euan Sutherland.
“We have taken swift and decisive action … as part of the business reset, which is a two- to three-year programme to gain full control of the product and costs,” said Dunkerton, who is the company’s biggest shareholder with a near 20% stake.
A key tenet of Dunkerton’s plan is to take the company back to its design-led roots and the GlobalData analyst James Yacoub said Superdry needed to work on its style credentials. Yacoub said the appointment of the former Nike executive Phil Dickinson as creative director could “help restore Superdry’s long lost ‘cool factor’”. But, he added, “this will be no easy task”.