The fashion brands Superdry and Joules have warned that profits will fall significantly below expectations after a tough Christmas.
Shares in both companies crashed after the warnings, the latest in a series of grim trading statements from the retail sector – Superdry by 22%, to 368p, and Joules by 33%, to a new low of 152p.
In its fourth profit warning in less than 12 months, Superdry told investors on Friday that it may make no profit at all this year after poor trading over the festive period.
The company, best known for its hoodies and T-shirts emblazoned with Japanese script, said it expected to make between nil and £10m for the year, against City forecasts of about £20m. In 2019, Superdry made underlying profits of almost £42m, although it made a pre-tax loss of more than £85m after one-off costs.
Superdry admitted it suffered a shortage of best-selling products but also blamed subdued demand in the run-up to Christmas and heavy discounting across the high street.
Sales slumped by 15.8% in the 10 weeks to 4 January, compared with the same period a year before. Even its online operation was not immune from the downturn as sales dropped by 9.3%.
Superdry said retail sales fell £23m short of expectations after a strong Black Friday discount period, predominantly online.
The difficulties come after a change in strategy under the company’s co-founder Julian Dunkerton, who returned in a boardroom coup in April when the business foundered in his absence.
The entrepreneur, who started out selling clothes on a Cheltenham market stall, has stopped using price cuts to tempt shoppers and is aiming to have smaller more upmarket collections that play on the brand’s design roots.
However, Dunkerton has been hit by a series of difficulties since returning, including a near-£4m accounting error revealed before Christmas.
Dunkerton said his plan for long-term growth remained on track despite the profit warning: “While we have always said it will take time, we continue to make progress in implementing our strategy. A key element of this is to focus on and return to full-price sales and reduce promotional activity, and we halved the proportion of discounted sales over our peak trading period, benefiting both our margins and the Superdry brand.
“However, this adversely affected our sales during the peak trading period, given the level of promotional activity in the market. Despite this, our disciplined plan to reinvigorate the brand and return Superdry to sustainable long-term growth is on track.”
Joules, meanwhile, warned that annual pre-tax profits would be “significantly below expectations”, which analysts had pegged at £17.3m, up from £15.5m the previous year.
The brand, known for its colourful tops and and jackets in spots and stripes, blamed shortages of stock during its end-of-season sale event for a 4.5% fall in sales over the seven-week period to 5 January against the same period a year before. It said the shortages particularly affected its online sales.
Nick Jones, the chief executive, said: “We are disappointed with our inability to fully satisfy our customers’ demand through our online channel during the important Christmas sale period. We have identified the root cause of this one-off issue and have taken steps to prevent its reoccurrence.
“Demand for the Joules brand and its unique products remains strong, with continued growth in total customer numbers and website traffic as well as robust results in our stores and partner retail channels.”
