Shares in premium clothing brand Superdry (SDRY) rallied 9% to 128.8p on Thursday, even as the fashion and accessories retailer reported a near-37% slump in fourth quarter sales.
Like so many other retailers, stores have remained shuttered around the world because of lockdown.
But a large sales decline was anticipated, allowing investors to look beyond the headline numbers and access improving online sales trends. Digital revenues nearly doubled in the last four weeks to approximately £3.7m per week, offsetting approximately one third of the lost store sales.
With lockdown rules beginning to ease, co-founder and chief executive Julian Dunkerton said ‘our stores in Europe have begun to reopen and I am excited by our new ranges for the Autumn/Winter season’.
Co-founder and chief executive Julian Dunkerton
Superdry pulled financial guidance in March, but the Cheltenham-headquartered business boasts the best part of £40m net cash in the coffers to help see it through the COVID-19 crisis, and is also in talks with lenders and potential new financing providers regarding additional liquidity.
SALES SLUMP 37%
Today’s trading update revealed the impact of COVID-19 on the business. Group revenue slumped 36.9% to £118.5m in the fourth quarter, reflecting the closure of stores from late-March.
Yet despite the global lockdown, Superdry has continued to trade online with stringent health and safety controls in place across its warehouses.
BALANCE SHEET BALLAST
As at 5 May, Superdry also had £39.8m net cash on the balance sheet. That is only modestly below the £47m net cash reported as at 18 March and reflects a raft of cash preservation measures including furloughing staff, reducing capital expenditure and director pay cuts.
Prudently, Superdry has also passed the final dividend for the year to April 2020, with results originally scheduled for 9 July now postponed by five to eight weeks.
Dunkerton insisted he is ‘pleased with the accelerating shift in sales to online’ and said Superdry has ‘seen a particularly good performance from our women’s ranges which, for the first time ever, are accounting for around half our sales. Clearly however, the closure of all our stores has had a major impact.
‘We are taking all practical steps to preserve cash, looking carefully at all areas of the business and working to secure additional liquidity and financial flexibility.’
