Many fashion retailers have struggled to garner consumer interest in recent times due to falling disposable incomes for most workers. This has led to profit warnings being posted by traditionally successful brands such as Burberry and Mulberry, and the eventual lapse into administration by high street favourites including Peacocks, JJB Sports and even designer label Aquascutum.
However, there are signs that the trading environment is picking up, with department store chain John Lewis revealing a boost in clothing item sales this month and, most recently, SuperDry owner SuperGroup posting rising profits in contrast with the past year of poor results.
In the first half of 2012, SuperGroup managed to achieve a 13 per cent climb in profits, taking the pre-tax profit for the six months to the 28th October to £14.7 million. This is an improvement on the £13 million made during the same period last year, at which time the chain posted a string of profit warnings due to consumers converting to cheaper brands.
Meanwhile, total sales of the brand’s clothing items, including the trademarked hooded sweaters, t-shirts and jogging bottoms – as well as the more formal checked leisure shirts – grew by 16.2 per cent, bringing the total sales in this area to £158.2 million.
SuperGroup believes that much of their success in the first half was down to an expansion in the ranges of existing items, as well as behind the scenes improvements in areas such as systems and operations. Teamed with growing consumer confidence, this sets the group up for a strong start to 2013.
Julian Dunkerton, chief executive of the fashion chain, remains cautious about the future yet believes that the progress made in trading this year will set the firm in good stead next year.
He says; “The economic outlook remains uncertain but I am confident in our strategy and our ability to maximise the opportunities we have in the UK and internationally and deliver our full year profit targets.”
The majority of SuperDry ranges are made from cotton, and as the wholesale price of the material dropped greatly in the past few months the retailer managed to save greatly on the cost of raw materials. Improved relations with suppliers also contributed to the falling cost of manufacturing.
Group wholesale sales jumped by 7.9 per cent internationally when based on a single currency basis, although the impact of the Eurozone crisis presumably has had an effect on sales in the central and southern European market.
Yet in the UK, long term existing stores saw a sales leap of 3.9 per cent which largely made up for losses elsewhere in SuperDry’s international market base. Although this is a 0.1 per cent drop from the same period last year, it is a huge improvement from the second half of the past financial year when three profit warnings were posted in only six months.
It seems, then, that SuperDry is once more in the favour of British consumers. Unfortunately, this buoyancy in sales may be short lived should the UK head once more into recession and consumers begin to feel the grip of economic uncertainty on their budgets once more.
SuperDry’s UK retail property stock consists of 79 stand alone stores. In addition the brand has 71 department store concessions.
Do you think SuperGroup’s failings last year were largely down to poor management and errors in judgement rather than a dip in consumer interest and customer loyalty? How could the SuperDry brand encourage shoppers into their stores should the UK enter a triple dip recession – would it be a matter of focusing on quality, or would the chain have to drop prices in order to suit lower disposable incomes?
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