LONDON (Reuters) - Britain’s Superdry (SDRY.L) joined a growing list of fashion retailers hit by unseasonably hot weather as the company warned full year profit would fall short of market expectations, hammering its shares.
Superdry shares, already down 47 percent so far this year due to declining store sales, fell as much as 23 percent on Monday.
The company also said foreign exchange hedging mechanisms had not provided the degree of protection expected, leading to around 8 million pounds in additional costs.
The group is five months into an 18-month product diversification programme aimed at reducing its reliance on heavier weight products, such as jackets and sweatshirts. It plans to sell more dresses, skirts, women’s tops and denim, as well as expand into premium, sports and licensed goods.
But the unusually warm summer and autumn in the UK, continental Europe and the east coast of the United States has hit the sales of many clothing retailers.
Last week shares in rival Ted Baker (TED.L) tanked 14 percent after it warned of a tough remainder of the year, and British suit retailer Moss Bros Group (MOSB.L) in September warned that full year profit would take a substantial hit.
Even online sellers have been burned by the high temperatures with Zalando (ZALG.DE), Europe’s biggest online only fashion retailer, last month cutting its 2018 outlook for the second time in as many months..
Superdry said the continuation of warm conditions through September and into the first half of October had significantly affected demand for its autumn and winter range, particularly sweatshirts and jackets which account for around 45 percent of its annual sales.
The weather conditions, combined with challenges facing some of the trading partners Superdry supplies, were expected to adversely impact 2018-19 profits by around 10 million pounds, it said.
“Superdry is a strong brand with significant growth opportunities...but we are not immune to the challenges presented by this extraordinary period of unseasonably hot weather,” said Chief Executive Euan Sutherland.
The group plans 5 million pounds of additional investment in marketing, digitisation and automation.
Prior to Monday’s update analysts’ average forecast for 2018-19 pretax profit was 109.5 million pounds, according to Refinitiv data, up from the 97 million pounds made in 2017-18.
“Our initial calculations suggest today’s update is guiding to (around a) 20 percent downgrade based purely on H1 trading conditions and performance,” said analysts at Liberum.
Superdry forecast “mid-single digit” global brand revenue growth for its first half period, with “high-single digit” wholesale revenue growth and “low-single digit” own store revenue decline.
The group usually delivers 70-75 percent of its full-year profit in the second half of its financial year.
“In the small number of cooler days in September, Superdry saw strong year-on-year performances, particularly from its cold weather product categories as footfall increased,” it said.
The stock was down 193 pence at 825 pence at 0900 GMT, valuing the business at 674 million pounds.
Reporting by James Davey; editing by Sarah Young and Kirsten Donovan