Struggling Superdry to make cuts of £35m as it issues profit warning

Struggling fashion firm Superdry has issued a profits warning and announced £35m worth of cuts as it looks to turn around its business.

The Cheltenham firm, which was launched by chief executive Julian Dunnkerton, had previously said it would break even this financial year.

But despite recently selling off the rights to its brand in Asia for £34m the company  says trading has worsened since the start of the year.

In a trading update the company said retail sales in February and March, whilst showing significant year-on-year like-for-like growth, have not met expectations.

Superdry say this is down to the cost-of-living crisis having a significant impact on spending and footfall, and poor weather resulting in less demand for the new spring-summer collection.

The company said these trends are consistent across both UK and Europe  and wholesale performance continues to lag behind the rest of the group.

The increasing amount of uncertainty in the final weeks of trading and the reorganisation of the  wholesale division has seen the board take the decision to withdraw its previous guidance and issue the profit warning.

Superdry says it has identified initial cost savings of over £35m including closing stores,  logistics and distribution savings, better procurement, and continued range reduction.

The aim is to make the savings by the end of the year and then look for further savings.

Superdry is also looking at a potential equity raise.  Julian Dunkerton has said he will fully support and materially participate in any such equity raise.

He said: “The Superdry brand continues to evolve but there is no doubt that the market conditions we face are challenging, compounded by the issues we have previously disclosed and are working to address in wholesale.

“As a result, while we continue to deliver like-for-like growth in retail sales, we need to ensure our business is in the right shape to navigate these difficult times, which is why we are looking hard at our cost base.

“My belief in the Superdry brand is stronger than ever which is why I’m prepared to provide material support to any equity raise undertaken. I am confident that we have the right plan and, working together as a team, the business will emerge from the current turbulence stronger than ever.”