Superdry owner eyes China as warm front trims growth

Superdry revealed profits were up 2 per cent to 63.2m

The Superdry owner said it had signed a 50/50 joint venture with Chinese peer Trendy International Group that will see both firms invest a combined £18 million over at least ten years.

News of the overseas expansion came as the group, which runs more than 130 stores in the UK and Europe, unveiled full-year underlying profits that edged up 2 per cent to £63.2 million, reined in by last year’s mild autumn weather across the continent, which impacted sales of winter coats and jumpers.

The business, famous for its hoodie tops and T-shirts, said like-for-like sales grew 4.8 per cent in the year to 25 April, while it increased its total retail space by 82,000 sq ft, or 13 per cent.

It added that second half sales improved significantly, due to promotional activity and more efficient ordering from suppliers.

The retailer said the first ten weeks of its current financial year saw it maintain the second half sales growth, with like-for-like sales jumping 20.3 per cent, compared with a 4.9 per cent fall a year earlier, albeit against weaker comparatives.

Chief executive Euan Sutherland described China as “a very exciting market”, adding: “Customer tastes are evolving from luxury brands to brands influenced by ‘pop’ culture and we believe that the Superdry brand, with the right product, pricing model and infrastructure, is well positioned to be successful.”

Investec analyst Kate Calvert reiterated the firm’s “buy” recommendation on shares in SuperGroup, noting: “We believe [the group’s] global growth opportunities remain undervalued. “It is an early stage roll-out story with potential to double its UK & European owned store base, plus franchise growth opportunities and longer-term upside from the US and now China.

“Also, we believe there is a material opportunity to improve UK profitability.”

SuperGroup, co-founded by Julian Dunkerton from a market stall in Cheltenham in 1985, has seen plenty of change over the last year.

Last October Sutherland, the former boss at the Co-op, replaced Dunkerton as chief executive, who moved to the newly-created role of product and brand director. The move was aimed at boosting the operational capabilities of the business.

Meanwhile, value fashion chain Primark yesterday said its sales were 13 per cent ahead on a constant currency basis and 9 per cent up at actual rates in the year to date.

Parent company Associated British Foods maintained current year guidance after a modest rise in revenue.