Britain's Superdry hammered by COVID-19 lockdowns

LONDON (Reuters) - British fashion group Superdry reported much deeper first half losses and another big drop in sales in the Christmas quarter after COVID-19 lockdowns shut its stores.

FILE PHOTO: A woman walks past a window display at a Superdry store in London, Britain, March 1, 2019. REUTERS/Toby Melville

Co-founder and CEO Julian Dunkerton said the figures, released on Tuesday, hid “some massive positives” including strong e-commerce sales and a better product mix. But shares in Superdry, best known for its sweatshirts, hoodies and jackets, were down 14% at 0957 GMT, extending their year-on-year decline to 48.6% as investors focused on the deterioration in overall trading.

The group made an underlying pretax loss of 10.6 million pounds ($14.4 million) in the six months to Oct. 24, versus a loss of 2.3 million pounds in the same period in 2019.

First-half revenue slumped 23.3% to 282.7 million pounds and was down 27.2% in the 11 weeks to Jan. 9.

Superdry said 23% of owned store trading days were lost in the first half and 38% in the Christmas quarter due to lockdown restrictions.

As of Jan. 9, 173 stores were temporarily closed, representing 72% of its estate.

Most Superdry stores are focused on major city centres and retail sites, locations most impacted by the pandemic in terms of shopper numbers. So the company has suffered even when its stores have been open.

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Dunkerton, who retook control of the group in 2019 and owns 20% of the equity, said the impact of the coronavirus crisis masked signs of progress in the company’s efforts to turn around its business.

They included e-commerce sales, which rose nearly 50% in the first half, as well as progress on product ranges, the mix of womenswear, cost savings, sustainability and building the management team.

Superdry has also sealed a marketing tie-up with Brazilian soccer star Neymar.

“Against the backdrop of the pandemic, we’ve actually done rather well,” Dunkerton told Reuters.

Given the uncertain outlook the group did not provide any formal guidance for the full 2020-21 year and beyond.

“We recognise the material uncertainty noted in our going concern assessment,” it said.

It has also agreed with existing lenders to reprofile profit related covenant tests for the period ending April 2022.

However, Dunkerton stressed Superdry’s liquidity remained strong with net cash of 54.8 million pounds and a 70 million pound asset-backed lending facility.

($1 = 0.7351 pounds)

Reporting by James Davey; editing by Paul Sandle, Jason Neely and Susan Fenton