Superdry sees shares plummet as it gets its sums wrong

MORE than £160 million was today wiped off the value of the fashion chain behind the Superdry label – worn by the likes of Helena Christensen, David Beckham and Pippa Middleton – after it announced a shock profits warning blamed partly on a maths error.

SuperGroup, which also owns the Cult and SurfCo California brands, said that profits will be much lower than expectations, with margin pressure and increased operating costs also hitting its bottom line.

A spokesman for the firm, which had been one of 2010’s most successful stock market flotations on the back of stellar sales figures, blamed the £2.5m mistake in the forecasts for its wholesale division for the full year on “human error”.

“A number in the forecast was in with the wrong sign on it. There should have been a negative, there was a plus. That clearly makes quite a big swing,” explained a spokesman for the company.

The company said that, due to the timing of customer orders over the year-end period, a further £2m of wholesale profit will now fall in 2012-13 and not in 2011-12.

SuperGroup, founded by Julian Dunkerton, also said that, although retail sales of its trademark T-shirts, hooded tops, check shirts and jogging bottoms were trading in line with expectations, margins had also fallen.

In total, pre-tax profits for the year to the end of this month will be around £7m short of the previously expected figure of £50m.

Shares fell by 38 per cent, or 217.7p, to close at 351.8p as analysts reacted with dismay to the announcement. It followed a profits downgrade last October blamed on the botched implementation of a warehouse IT system upgrade that left stores short of stock.

It had further scaled back profit expectations as recently as February when it said its store estate – 76 UK outlets and 74 concessions including six in Scotland – had a decent Christmas but saw weak trading in the final three weeks of January.

John Stevenson at Peel Hunt today downgraded the shares to sell and said the profit warning “questions management control and market communication”. “We have no confidence in delivery or market expectations, and struggle to see the shares as being investible,” he commented.

Matthew McEachran at Singer Capital Markets described the update as the “latest calamity” for the company.

He said: “We had put faith in the growth story but are placing our estimates and recommendation under review after this latest issue.”

Numis Securities said the update reinforced its view that the brand has passed its peak.

“We reiterate our sell rating and expect the sales trend to demonstrate a negative trajectory through 2012,” it said.

But Freddie George at Seymour Pierce believes the longer-term story for the company was still positive and said “steps have already been taken to minimise the chances of further structural upheavals” including a number of management changes.

He also said that the changes would enable Dunkerton to concentrate on developing the Superdry brand “which remains, in our view, very much in vogue”.