Superdry Stock Declines: Profits Take a Sour Turn

Superdry

The UK’s Superdry (OTC:SEPGY) is another clothing giant facing trouble from waning profits and floundering shares. Superdry stock has lost 70% of its value this year alone, proving that 2018 has not been an easy year for the clothing mecca.

What is happening to this once very ‘in’ superbrand?

Superdry Stock is Waning

The company warned investors of weaker than expected profits, saying shoppers have not bought extra winter layers this year.

The company is expecting annual profits between £55 million and £70 million. However, analysts had been expecting around £84 million in profits. That’s quite the drop.

Superdry stock plunged 30% on the announcement.

Euan Sutherland, Superdry’s CEO, blamed warmer weather in part for the tough year: 

“Superdry had a difficult first half, impacted by unseasonably warm weather across our major markets, a consumer economy that is increasingly discount-driven and the issues we are addressing in product mix and range.”

He also blamed the company’s “over-reliance” on jackets and sweatshirts for its poor sales.

Superdry Stock Reflects the Problem 

Superdry is known for its heavily branded coats and hoodies, designed with a Japanese styling. It was, in its earlier years, a statement brand of ‘cool,’ hitting a niche market of trendy teenagers and college-goers.

However, in recent years it seems the brand has lost ground with the younger generation. Its once reliant shoppers are now older and favoring ‘classier’ attire, and its once unique branding is now ubiquitous, with cheap copycats everywhere. Its exclusivity is gone and very little has been done to evolve with the times. To give some perspective, the Financial Times recently dubbed the clothing as appropriate for “cool dads.”

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As Maria Malone from Manchester’s Fashion Institute puts it:

“It is a brand that hit a trend in the UK several years ago… Its customers are [now] older, thirty plus, but the website features young models, this confuses the consumer.”

And her thoughts are mirrored by retail analyst Kate Hardcastle, who believes the brand is suffering from a lack of evolution:

“To stay fashionable and engage with a buyer a brand has to have an air of exclusivity about it.”

Rescuing Superdry

Superdry is by no means dead. Rather, the company will need to adapt to different retail climates. It is starting by closing some of its stores as part of a cost-cutting drive to save £50 million by 2022. It will also review store sizes and rents in 2019. 

As for its clothing line, the retailer is in the midst of an 18-month strategy to revamp the brand, which will see it introduce childrenswear and 100% organic cotton products.

Featured Image: Depositphotos/© XiXinXing

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