Superdry rocked by dismal Christmas: Joules also loses out… but JD Sports is a winner
Superdry has warned annual profits could be wiped out entirely after it suffered a dismal Christmas.
In a bleak update, the fashion retailer’s founder Julian Dunkerton admitted that his plan to wean the company off discounting had backfired as desperate rivals slashed prices heavily during the festive period.
The 54-year-old, who returned to run Superdry after a boardroom coup last April, also said the group struggled to shift a glut of old clothing left behind by previous management.
Superdry founder Julian Dunkerton (pictured with his wife Jade Holland Cooper) admitted that his plan to wean the company off discounting had backfired
Shares were down 24 per cent in early trading, as the firm warned it could make between zero and £10million in profit this year, far below analysts’ predictions of more than £40million.
They recovered later in the day to close down 6.7 per cent, or 31.8p, at 440p.
At the same time, shares in fashion rival Joules crashed 21.2 per cent, or 48p, to 178p, as it too complained of a tough Christmas.
But sportswear retailer JD Sports looked set to buck the trend, with the company saying it expected to report ‘positive’ sales growth over the period. Shares rose 0.6 per cent, or 4.6p, to 832p, having been the FTSE 100’s best performer during the 2010s.
Richard Hyman, an independent retail expert, said the ‘winners and losers’ of Christmas were starting to emerge.
‘The idea that Superdry could completely change the way it traded and be a stonking success straight away was always fanciful.
‘Retail is an incredibly competitive business but this year discounting has gone through the roof.
‘It’s disastrous, because by doing that what they are telling customers is ‘Delay your purchase because our products will eventually become cheaper if you wait’.’
The disappointing performance at Superdry is humiliating for Dunkerton as he attempts to mount a turnaround at the brand.
In October he boasted that he had ‘saved Christmas’ with a new approach for the company. But he was yesterday forced to admit that trading over the Christmas period had been ‘lower than expected’.
Superdry said the reaction to its newer clothes had been encouraging and that it managed to halve the proportion of clothes sold at a discount. But massive price cuts by rivals undercut this strategy, as well as a need to clear out lingering old clothing lines.
Neil Wilson, chief market analyst at Markets.com, said: ‘Superdry’s numbers are woeful.’
Joules also blamed stocking problems for a hit to profits, saying that ‘one-off’ mistakes had caused too many clothes to be sent to its stores while not enough were available online.
It warned that group sales had fallen by 4.5 per cent and that annual profits were likely to be ‘significantly’ below the £16.7million expected by City analysts.
Boss Nick Jones said: ‘We remain focussed on continuing to expand the Joules brand and are making significant enhancements to our supply chain operations in the UK and US to deliver both future capacity growth and efficiency.’
It was in contrast to the rosier picture at JD Sports, which said it was expecting annual profits to be at the top end of its £403million-£433million prediction.
The sportswear brand said it saw positive like-for-like sales across its fashion businesses, with particular growth overseas, during the crucial festive period.