par SuperGroup
Superdry Plc - Preliminary Results announcement
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Superdry plc (SDRY)
SuperdryPlc ("Superdry" or "the Company")
16 September 2021 Preliminary Results for the 52 weeks ending 24 April 2021
Sharpened strategy sets out key pillars of brand reset Performance significantly impacted by Covid-19 disruption
Superdry announces its Preliminary results covering the 52-week period from 26 April 2020 to 24 April 2021 ("FY21") and a trading update covering the 18-week period from 25 April 2021 to 28 August 2021.
Julian Dunkerton, Chief Executive Officer, said: "Like most brands with a physical presence, our performance over the past year has been impacted by the significant disruption of Covid-19, but I am really proud of how the business has stepped up and returned to revenue growth in Q4. Store and Wholesale revenues are recovering well despite continued subdued footfall, and Ecommerce margin is benefitting from our return to a full price stance. We have used this time effectively to accelerate our brand reset and put the business in the best possible position for the future. We have strengthened the team with the appointments of Shaun Wills as CFO, Silvana Bonello as COO and Peter Sjӧlander as Chairman, and we're sharpening our strategic focus on the key areas of our brand and product, our engagement with our customers, our operations and on sustainability. All of us at Superdry are driven by our goal of being the leading listed sustainable fashion brand. There's a lot still to do but I'm thrilled that we have been recognised for our efforts, recently being ranked 1st in the Financial Times list of Europe's Climate Leaders 2021, and winning Drapers' Sustainable Fashion Awards 2021 'Positive Change Award'. Our accelerated sustainability targets will see all our pure cotton garments produced entirely from organic cotton by 2025, achieved through supporting 20,000 farmers in India. This initiative was recognised with my award for Best Organic Ambassador by The Soil Association, the UK's only organic awards. I'm in no doubt that we're turning the corner and there's a lot to be excited about. Trading has been encouraging since the reopening of our stores, and we'll take a big step forward as a brand with the opening of our global flagship store in Oxford Street later in the Autumn. Whilst a lot remains uncertain, I'm looking ahead to 2022 and beyond with real confidence as we deliver our reset." Financial overview
Strategic and operational highlights During FY21 we sharpened our strategy to deliver on our mission: "to inspire and engage style obsessed consumers, while leaving a positive environmental legacy". This clarity has allowed the entire business to align behind the strategy, which will be delivered through four key pillars. 1) Inspire through product & style Our focus on customer segmentation, delivered through five distinct collections, will allow us to inspire the right consumers with the right experiences, both online and in-store. FY21 highlights included:
2) Engage through social We will grow the number of followers and engagement across all our social platforms through our 'social-first' brand marketing approach, driving demand and traffic. A clear programme of improvements in our Ecommerce platform is focused on enhancing the customer experience and driving online conversion. FY21 highlights included:
3) Lead through sustainability Our ambition is to be the most sustainable listed global fashion brand by 2030, becoming the 'Go-To' destination for sustainable product. FY21 highlights included:
4) Make it happen Our integrated, multi-channel operation will be delivered through operational enablers and efficiencies across our end-to-end supply chain, amplified by a re-energised corporate culture. FY21 highlights included:
Current Trading The table below shows the revenue change on a 1- and 2-year basis for the 18-week period ending 28 August 2021:
Group revenue increased 1.9% year-on-year as Covid-related restrictions eased, but high street footfall remained subdued, which continue to impact our physical trading channels. As anticipated, store revenue rebounded strongly against FY21, with the UK (+76%) and the US (+169%), lapping temporary store closures in the prior year. This was partially offset by the EU which suffered from further closures at the start of the current period (-10%). Ecommerce sales were more modest against the extraordinary growth we experienced in the prior year. The return to full-price trading resulted in a less pronounced uplift during the sale period, but did drive online gross margin up 10.5%pts year-on-year. Wholesale revenues have started to recover, increasing 12.7% year on year as our partners gain more confidence in the macroeconomic outlook. We would expect this recovery to continue as they sell through carried forward stock and see their markets return to normality. Outlook Whilst significant market uncertainty remains, we do expect a recovery in total revenue in FY22, driven by:
We expect margin to increase across all channels as we transition towards a full price stance, supported by further mix benefits from the switch back into stores. We expect to generate operating leverage from reduced store rents and payroll compared to pre-Covid levels, although we anticipate a £35-45m year-on-year increase in costs due to one-off benefits recognised in FY21, such as the return of UK business rates, the end of furlough support, and the normalisation of other variable and discretionary costs. Considering the above, we don't expect a change to the adjusted PBT market expectations for FY22. We are continuing to focus on cash generation and working capital efficiency in FY22. We expect to reduce inventory by a further 2m units, which will partially offset the unwind of deferred rent and service charges (£40m, inclusive of VAT), some of which we expect to crystallise as permanent savings as we continue to negotiate lease terms. Recognising the structural growth opportunity in Ecommerce, as well as the geographic and customer segmental targeting opportunities in our Wholesale business, we expect revenue to exceed peak historic levels in the medium term. Disciplined full price trading, continuing rent renegotiations, and the operating leverage from cost savings will also return the business to historic operating profit margins. Notes 1. Foreign currency sales are translated at the average rate for the month in which they were made. 2. Fulfil From Store sales reallocated to Ecommerce in the current (£8.3m) and prior year comparatives (£1.6m). 3. 'Adjusted', 'Adjusting' and 'Net Cash' are used as alternative performance measures ('APMs'). Definition of APMs and how they are calculated are disclosed in the financial statements in Note 22. 'Net working capital' has been reconciled within the CFO Review. 4. 'Lost trading days' calculated as the simple average number of stores closed each day of the period as a percentage of total potential trading days in the period, excludes impact of restricted trading hours. 5. Sustainably sourced product defined as organic, low impact and/or recycled in line with our Environmental Policy. 6. Cash annualised saving has been calculated based on the effective date of the lease agreement.
Market Briefing A webcast for analysts and investors will be held today starting at 09:00, followed by a Q&A with management. The webcast will be available to join live, but questions will be limited to analysts. If you would like to register, please go to https://secure.emincote.com/client/superdry/superdry009. A recording of the event will also be available on our corporate website shortly afterwards. Superdry is pleased to announce the appointment of Peel Hunt LLP as joint corporate broker to Superdry, with immediate effect. For further information: Superdry:
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Notes to Editors Our mission is "To inspire and engage style obsessed consumers, while leaving a positive environmental legacy" through hyper-segmentation of twelve consumer types across five collections. We design affordable, premium quality clothing, accessories and footwear which are sold around the world. We have a clear strategy for delivering continued growth via a multi-channel approach combining Stores, Ecommerce, and Wholesale. Superdry has 231 physical stores and around 475 franchisees and licensees. We operate in over 50 countries and have over 3,750 colleagues globally. Cautionary Statement This announcement contains certain forward-looking statements with respect to the financial condition and operational results of Superdry Plc. These statements and forecasts involve risk, uncertainty, and assumptions because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. These forward-looking statements are made only as at the date of this announcement. Nothing in this announcement should be construed as a profit forecast. Except as required by law, Superdry Plc has no obligation to update the forward-looking statements or to correct any inaccuracies therein. The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain. The person responsible for this announcement on behalf of Superdry is Ruth Daniels, Group General Counsel and Company Secretary of Superdry. Chair's Statement
Welcome to Superdry Plc's preliminary results for FY21. I was appointed Chair on 29 April 2021 and I am excited to work with another global brand. During my first few months in post, I have spent time with fellow Board members and senior colleagues at Superdry (as far as restrictions have allowed), familiarising myself with Superdry's business model and operations. I would like to take this opportunity to thank former Chair, Peter Williams, for his work with the Board and Superdry from April 2019 to April 2021. I would also like to thank all of my new colleagues at Superdry, at our Head Office and in our stores and locations worldwide, for their continued hard work and commitment during this difficult and extraordinary year. The ways in which the Covid-19 pandemic have impacted our customers, colleagues, suppliers and operations during FY21, and how we have responded to those challenges, have been set out in the Covid-19 Statement. The crisis encouraged the Executive Team to sharpen the strategy, accelerating reviews of digital platforms and of operations across all channels, enabling Superdry to emerge from the pandemic in a good position to drive the strategy forward. I invite you to read about our new strategy, led by Superdry's founder and CEO, Julian Dunkerton, and the Executive Team, in the Chief Executive Officer's Statement. Information on our financial results can be found in the CFO Review. As the Executive Team starts to implement our new strategy, there is a lot of work to be done, but there is also a lot to look forward to. Peter Sjölander Chair, Superdry plc
Our response to Covid-19
Our response to Covid-19 Throughout the pandemic there has been a significant level of uncertainty with restrictions regularly changing depending on local Government advice. Taking decisive actions to protect the long-term financial position of Superdry, whilst ensuring the ongoing wellbeing, health, and safety of our colleagues and customers, has continued to be our top priority. We have continued to trade online throughout the lockdown periods, sustaining operations in our distribution centres, whilst ensuring all appropriate measures were taken to ensure the health and safety of our staff. During FY21, an average of 39%1 of store trading days were lost. However, by the end of June 2021, most of our owned stores had reopened. Government support As a consequence of the enforced store closures in FY21 and in order to preserve as many jobs as possible through the peak of the pandemic we furloughed staff across our international owned store estate, corporate offices and distribution centres. The support we received from applicable furlough (or similar) schemes across the UK and EU to date totals £12.1m, with £9.2m recognised in FY21. During the initial wave of the pandemic our Executive team took a temporary pay cut of 20% for three months from 1 April 2020, whilst our CEO and members of the Board took a cut of 25% for six months. We also benefitted from UK Business Rates relief, equivalent to £15.7m in FY21 (FY20: £1.7m). Currently, this scheme has only been extended for a small number of our qualifying stores and the expected benefit in FY22 is roughly £5m. In addition, the business was eligible for £2.5m of local government grants across a number of markets (FY20: £nil). As at FY21 year end the Group had a modest deferral of €1.5m for Belgian VAT, with no other material deferrals of VAT, PAYE, or duty across any other territories. Cash management Improving operational efficiency and overall liquidity has continued to be a focus during the pandemic through reduced capex, tight control over day-to-day spend and working collaboratively with suppliers. In FY21, 39 stores' leases were renegotiated representing 17% of our portfolio. The total annualised cash benefit of the leases negotiated in FY21 was £5.3m2, with an average lease length of 3 years. In addition to the underlying reductions, there were £7.7m of one-off Covid related savings recognised in FY21 and we are anticipating in excess of £10m in FY22. Due to the continuing disruption from enforced closures, there was ~£40m of deferred rent and service charges, inclusive of VAT, as at the FY21 year-end, though we are yet to conclude on the majority of these contracts and so anticipate being able to reduce this liability during FY22. Inventory decreased by £10.4m to £148.3m through reduced buys and targeted clearance activity, and we will continue to see opportunities to reduce our working capital further in FY22 through optimised stock management. Given the continued unprecedented levels of uncertainty, the Group's financial performance and the focus on cash preservation, the Board agreed to recommend to shareholders that no final dividend be paid in FY21. The Group agreed a new Asset Backed Lending (ABL) facility in August 2020 for up to £70m, in addition to a £10m overdraft. As a consequence of the cash preservation measures and government support detailed above, we maintained a net positive cash balance in excess of £20m throughout FY21. Further detail regarding liquidity and our borrowing facilities can be found in the CFO Review. Employee and customer safety The Superdry Board and Executive team have continued to ensure robust processes are in place to allow for swift decision making in a rapidly changing environment. The Covid-19 Incident Management Team, comprising of a subset of the Executive Team, has continued to meet throughout the pandemic to manage the response to the crisis. When our stores reopened, we ensured availability of all necessary cleaning equipment, hygiene products and Personal Protective Equipment (PPE) to keep our employees and customers safe, in line with local government guidelines. We were an early adopter in introducing lateral flow testing. As we | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||