Superdry has swung to a near £150m loss and said it expected sluggish sales this year as the cost of living crisis hindered recovery plans at the struggling British fashion retailer.
The company, which this week suspended trading of its shares as auditors completed the final “technical points” of its annual accounts, reported a £148m loss for the year to 29 April. It compares with a £22.4m profit a year earlier
Superdry has been forced to turn to Hilco, the specialist retail investor that has pumped millions into the ailing budget retailer Wilko, for a “covenant-light” £25m loan at a hefty interest rate of 10.5% plus the Bank of England base rate. Although not yet drawn down, the loan may be needed to fund future running costs.
This is on top of an £80m facility agreed with Bantry Bay Capital, which has as one of its loan conditions the veto power over any prospective dividend payments to investors.
Julian Dunkerton, the co-founder of Superdry, said: “We have not delivered the sales growth we had hoped for, with results falling well below expectations. This led to challenges with liquidity and the need to shore up our balance sheet.”
Superdry has taken action such as implementing a £35m cost-cutting drive that has included head office redundancies and sold the rights to its brand in some Asia Pacific countries in a $50m (£39m) deal with the South Korean firm Cowell Fashion Company.
The British retailer said trading continued to remain tough, reporting an 18.4% fall in sales in its first financial quarter to the end of July.
Superdry blamed lower demand for its spring-summer collection on poor weather and the issue of weak orders from wholesale partners, who remained cautious about stock levels and liquidity as shoppers tightened their spending.
“I’m not expecting the consumer environment to become any easier soon,” said Dunkerton, who returned as chief executive in 2019 to turn round the business. “However, the actions we have taken and continue to take to ensure the health of the business, give me more confidence as we look into the future. The good news is that despite the external turbulence, the brand is in sound health and has momentum.”
The company said it took a £43.3m exceptional charge in a “re-evaluation of future store growth assumptions”, factoring in the volatile trading environment and cost of living crisis.
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Superdry does not expect to see any significant revenue growth this financial year as it focuses on cost savings and improving margins.
Victoria Scholar, the head of investment at Interactive Investor, said: “Shares in Superdry have fallen out of favour among investors, falling sharply so far this year. The cost of living crisis, weak consumer spending and a rainy summer have weighed on demand. And missing its accounts publication deadline hasn’t exactly been a great look either.
“Focus now will be on controlling costs in order to return the business to a position of better margins and profitability once again.”
