Beleaguered fashion chain Superdry (SDRY.L) announced on Wednesday that pre-tax profits fell by almost 57% to £41.9m in its most recent financial year, just three months after founder Julian Dunkerton won his six-month battle to rejoin the company.
After tax, the company lost £85.4m, down from a profit of £65.3m in 2018, primarily due to £129.5m in lease and impairment charges.
The company, which had signalled that earnings would be below market expectations with three profit warnings in eight months, pointed to the “difficult trading landscape for most fashion retailers,” saying that “unseasonably warm weather” led to declining sales.
It also said that Superdry “may have been losing its appeal to its traditionally broad consumer base.”
Revenue, at £871.7m, was flat, but the poor sales and a £11m credit charge relating to the one-time lease and store impairment charges saw pre-tax profits slide from £97m to £41.9m, at the bottom range of analyst expectations.
Same-store sales, a metric used to gauge the retailer’s underlying performance, declined by 10%.
The fashion chain also warned that revenue would decline slightly in 2020, pointing to “highly competitive” retail markets, Brexit-related economic uncertainty, and what it described as “legacy issues” in the company.
The company’s chairman, Peter Williams, said that it had been “a year of considerable challenge and change for Superdry.”
Towards the end of 2018, co-founder Julian Dunkerton asked to rejoin the company after “frustration” with the fashion chain’s performance.
But he was unable to reach agreement with the board, and in March he called a vote of shareholders.
In April, they voted to appoint Dunkerton and Williams to the board, prompting the entire existing board to resign, including then-CEO Euan Sutherland.
The following month, the company issued its third profit warning in eight months, noting that it would miss market forecasts for profits of £54.1m to £59.4m for its year to 27 April.
Last week, the company was forced to delay the release of its annual results, citing the complexity of the impairment charges.
Williams said on Wednesday that he and Dunkerton were “stabilising the business and working hard together to reset Superdry's strategy”.
“Whilst there may be early wins, the turnaround to sustained profitable growth will take time,” he said.
Noting that the company was “fortunate” that Dunkerton agreed to take on the role of interim CEO, he said Superdry had completed “preliminary work” in scoping out a specification for the role of his permanent successor.
Dunkerton, Superdry’s largest shareholder, has not revealed how long he plans to continue as interim CEO.
He created the chain with designer James Holder in 2003, but gave the role of CEO to Sutherland in 2014, instead taking the position of “founder and product brand director”.
He left that role in March 2018 due to disagreement with Sutherland’s overhaul of the business, which is now being blamed for the collapse in sales and series of profit warnings.