Investors were already steeled for disappointment from Superdry (SDRY) on the back of three profit warnings in under a year. Indeed, 2019 revenue was stagnant as the benefit from discounting and space growth in the first half was offset by poor performance across all channels in the remainder of the year. In the retail division, like-for-like store sales fell by 9.6 per cent while a 1.6 per cent revenue increase from ecommerce reflects a dramatic slowdown from the 26 per cent growth seen in 2018.
Following a review to identify unprofitable stores, the group took a £130m hit on store asset impairment and onerous leases, impacting around half of the owned retail estate and weighing on statutory earnings. Excluding these charges, underlying pre-tax profit still plunged by 57 per cent to £41.9m. This includes an £11.1m onerous lease provision, the use of which will disappear under new accounting standard IFRS 16.
New management is keen to stress these results reflect historic issues inherited from the previous leadership. With co-founder Julian Dunkerton back at the helm as interim chief executive, 2020 is viewed as a year of ‘reset’. Mr Dunkerton is seeking to reinvigorate the brand, which has lost some of its appeal, reversing the previous buyer-led approach and spearheading a return to the group’s design-led roots. All with the aim of restoring revenue growth, double-digit operating margins and profitability over a three-year timeframe.
By rebalancing promotional activity towards outlets only, sales are expected to fall this year as new product lines take time to appear. But by improving the gross margin (which fell by 2.5 percentage points in FY2019) management is forecasting a modest increase in profitability.
Jefferies expects underlying pre-tax profit of £57.4m and EPS of 52.4p to April 2020, rising to £76.1m and 71.4p in FY2021.
| SUPERDRY (SDRY) | ||||
| ORD PRICE: | 435p | MARKET VALUE: | £357m | |
| TOUCH: | 431-435p | 12-MONTH HIGH: | 1,371p | LOW: 354p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | na | |
| NET ASSET VALUE: | 318p* | NET CASH: | £35.9m | |
| Year to 28 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 487 | 59.5 | 56.1 | nil |
| 2016 | 598 | 55.4 | 50.7 | 23.2 |
| 2017 | 752 | 84.8 | 81.2 | 28.0 |
| 2018 | 872 | 65.3 | 62.2 | 31.2 |
| 2019** | 872 | -85.4 | -120 | 11.5 |
| % change | - | - | - | - |
| Ex-div: | 18 Jul | |||
| Payment: | 20 Sep | |||
| *Includes intangibles of £51.5m, or 63p a share, **Year to 27 Apr | ||||
