As Superdry’s losses deepen, all hopes rest on its brand reset, says GlobalData

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Following today’s release of Superdry figures for H1 FY2020/21 and the 11 weeks ending 9 January 2021; Gemma Boothroyd, retail analyst at GlobalData, a leading data and analytics company, comments: “Superdry continues to struggle in the face of COVID-19, with group revenue tumbling 27.2% in the first 11 weeks of H2 FY2020/21, and an underlying loss before tax of £10.6m for H1 warning of an uncertain path ahead. An overreliance on its store network meant sales were significantly hampered in the lead up to Christmas, as more temporary store closures across the UK and Europe forced store revenue to decline 52.1%. However, the retailer’s online performance also slowed, with growth of only 13.2% compared with 49.8% in H1, suggesting that Superdry failed to drive new loungewear sales following initial customer investment in this category earlier in the year— despite it reporting record levels of engagement for its Autumn/Winter 20 campaigns. As a result, early morning trading saw its share price fall 11%.

“The retailer is banking on a turnaround strategy spearheaded by CEO Julian Dunkerton and Creative Director Phil Dickinson, with the brand’s relevance fading in recent years as consumers have been attracted by the wide ranges and lower prices of fast fashion players such as ASOS, as well as the more desirable sports brands like Nike and Adidas. Given that COVID-19 lockdowns will continue to impact sales in the short term, Superdry’s new strategy to target and attract a younger demographic is imperative for its long term survival, as these shoppers are more accustomed to shopping online. Increased focus on social media and influencer-led campaigns will also be integral for Superdry, with the retailer recently partnering with Brazilian footballer Neymar Jr for an organic underwear campaign to bolster interest from younger consumers.

“The retailer’s priority of returning to a full price stance was hampered by the need for promotional activity throughout H1 FY2020/21 to clear excess inventory, which adversely impacted retail gross margin. Focus on cost management and cash preservation partially offset this, with a closing net cash position of £34.1m, a 27.2% improvement on the previous year. When the full price proposition is achieved, whether consumers invest in Superdry’s ethos of premium clothing will be crucial in determining its success. Superdry’s emphasis on sustainability, with a target of 100% organic cotton in products by 2030, will help to support its vision and justify an elevated price.”