LONDON (Reuters) - Fashion brands Superdry (SDRY.L) and Joules (JOUL.L) became the latest Christmas casualties of Britain’s struggling retail industry on Friday, issuing profit warnings that sent their shares plunging.
Shares in Superdry, known for its Japanese style logo designs, slumped 19% to a two-year low after it said lower-than-expected Christmas sales could wipe out pretax profit for the year to April.
Joules, famed for its hand-drawn prints, also saw its shares drop about 20% after it said profits for the year to May would be significantly below market expectations, due largely to a shortage of stock over the Christmas season.
British retailers, from department stores to fashion brands, are battling some of the toughest trading conditions seen for a generation.
Industry data on Thursday showed British shoppers cut back at the end of 2019, rounding off the worst year since the mid-1990s for retail sales amid uncertainty over Brexit, last month’s election and slowing wage growth.
Superdry co-founder Julian Dunkerton, who returned to the group after a boardroom coup in April, is overhauling product and cutting promotions in an attempt to reinvigorate the brand.
He said Superdry halved the proportion of discounted sales over Christmas, benefiting both its margins and the brand.
“However this adversely affected our sales during the peak trading period given the level of promotional activity in the market,” he said.
Superdry’s revenue fell 15.8% in the 10 weeks to Jan. 4, with poor trading in stores compounded by a near 10% decline online.
It said underlying pretax profit for the year to April would be in a range of zero to 10 million pounds.
Analysts had forecast pretax profit of 40.5 million pounds, according to Refinitiv data, broadly in line with the previous year.
Superdry said in December it had recorded its strongest online trading on Black Friday since the U.S. November shopper promotion arrived in Britain.
But it said on Friday its return to full-price sales resulted in a lower-than-expected performance for the rest of the period, with demand particularly subdued after Christmas.
Citing “exceptionally high level of clothing industry promotions,” Jefferies analysts cut their pretax profit forecast to 4.6 million pounds from 20 million.
Customer reaction to the limited amounts of the new management team’s ranges had been positive, Superdry said, but the full impact would not be seen until autumn-winter 2020 when the refresh would be seen across the entire range.
Reporting by Paul Sandle; Editing by Kate Holton and Mark Potter