Yahoo Finance Superdry shares plunge as boss dismisses 'going concern' warning
The boss of Superdry insisted there was "no way this company is heading towards any financial difficulty" as rolling lockdowns continue to hammer its sales and profits.
The retailer sounded a warning over its ability to continue as a going concern in its half-year update because of the duration of the current lockdown and volatile consumer demand.
Julian Dunkerton, who co-founded the business, said it was a "technical [accounting] thing" due to coronavirus and it had to be included. We don't have structural debt, I'm fully confident in our position cash-wise. It's a technicality."
He said the warning that it "may be unable to realise its assets and discharge its liabilities in the normal course of business" was not new and it had been included in September's results for the year to April 2020.
Shares plunged almost 14pc to 207p in afternoon trading, valuing the company at less than £170m. Shares were worth almost £21 at the start of 2018.
Superdry's directors added they had a "reasonable expectation" that the company had adequate resources for the foreseeable future, and could operate within its borrowing facilities and covenants for at least a year.
The company had net cash of £54.8m and total available liquidity of £130m as of Jan 9.
The remarks came after Superdry reported a slump in sales and profits in the six months to Oct 24. Pre-tax losses widened to £18.9m on a statutory basis on revenues of £282.7m - down almost a quarter on the same period the previous year.
Britain's high street has been battered by the third national lockdown, with non-essential stores forced to shut, leaving brands to rely on their online businesses to help mitigate the damage.
E-commerce sales rose 13pc during the 11 weeks to Jan 9, helping Superdry offset some of the lost store sales, which fell by more than half during the same period.
Mr Dunkerton said: "While revenue and underlying profit have been impacted by the external conditions, the brand has continued to focus on the reset, however, with over 70pc of stores currently closed and having to shut a significant number over peak, it will take time to see the benefits of all our hard work flow through to the results."
He returned as boss of Superdry in 2019 after a boardroom coup, the climax of a bitter battle with previous management over the direction of the business.
The retailer has been striving to discount fewer items and capture a new wave of shoppers through more social media tie-ups with influencers.
It has been modernising its fashion ranges by introducing vegan trainers and filling its jackets with recycled plastic to make them more sustainable.
The chief executive said he had no plans to shut stores or make staff redundant.
Manjari Dhar, an analyst at RBC, said Superdry was making good progress on its turnaround strategy but recent lockdowns were likely to hit sales in the short term.
"Although Superdry has introduced a more segmented, targeted range, we think it will continue to be challenging to appeal to different age groups," she said.
"Longer term, the opportunity is for Superdry to once again reinvent itself, under the leadership of co-founder and majority shareholder, and find relevance amongst a younger consumer group, against the backdrop of a crowded apparel marketplace."
