Superdry plc (SDRY) Superdry Plc - Preliminary Results announcement 16-Sep-2021 / 07:00 GMT/BST Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
("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.
GBPm FY21 FY20 Year-on-year
Group Revenue1,2 GBP556.1m GBP704.4m (21.1)%
Gross Margin 52.7% 53.6% (0.9)%pts
Adjusted loss before tax3 GBP(12.6)m GBP(41.8)m (69.9)%
Adjusting items3 GBP(24.1)m GBP(125.1)m (80.7)%
Statutory loss before tax GBP(36.7)m GBP(166.9)m (78.0)%
Adjusted basic loss per share3 (19.4)p (43.5)p (55.4)%
Basic loss per share (44.0)p (174.9)p (74.8)%
Net working capital3 GBP124.1m GBP147.0m (15.6)%
Net cash position3 GBP38.9m GBP36.7m 6.0%
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 Sj?lander 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."
-- Total revenue down 21.1% to GBP556.1m, a reflection of the significant impact from Covid-19 relateddisruption resulting in 39% of store days lost4 in FY21 (10% in FY20).
-- Gross margin decreased by 90bps to 52.7%, with our return to a full price trading stance online in Q4more than offset by the focus on cash preservation driving increased online promotional activity at the start ofthe pandemic.
-- Full year adjusted loss before tax of GBP(12.6)m (FY20: GBP(41.8)m), with cost saving measures and governmentsupport helping to offset trading shortfalls. FY21 includes a GBP33.8m year-on-year benefit from reduceddepreciation, primarily due to the FY20 impairment charge, and a GBP14.3m accounting credit due to leasemodifications.
-- Statutory loss before tax of GBP(36.7)m (FY20: GBP(166.9)m) includes a store impairment charge and onerousproperty related contracts provision expense of GBP15.8m (FY20: GBP124.8m).
-- The Board has decided not to propose a final dividend for FY21.
-- Total deferred rent in FY21 was GBP40m (inclusive of VAT), of which GBP11m is recognised in Trade and otherPayables (non-IFRS 16 leases) and GBP24m in Lease Liabilities (IFRS 16 leases).
-- Net working capital inflow of GBP22.9m year-on-year driven by a combination of tight control over inventoryresulting in a decrease of GBP10.4m, receivables increased by GBP10.7m and payables increased by GBP23.2m.
-- Liquidity has remained strong with net cash up 6.0% at GBP38.9m, having not drawn down on our ABLfacilities at any point during the period, owing to our continued discipline on cash preservation.
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:
-- Extending the segmentation of our range into five collections, as well as identifying teen consumers(13-15 year olds) as a significant opportunity. Augmenting the mainline collections, we launched our first shortorder collection online, allowing us to capitalise on the in-season 'tie-dye' trend.
-- During the pandemic we re-merchandised four key UK stores to fully showcase these new ranges, drivingcomparatively stronger trading performance in those locations versus the wider portfolio.
-- Introduction of the Centre of Excellence innovation hub within our creative team
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:
-- Active customer database up 3% year-on-year, supported by investment into brand marketing activity, suchas the recent campaign with Neymar Jr.
-- Grew social followers by 6% year-on-year to 3.3m, with the pace accelerating in FY22 to date.
-- Re-platforming of our Ecommerce websites to microservices on-track for early 2022 delivery.
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:
-- Achieved 1st place in the inaugural Financial Times "Europe's Climate Leaders 2021" survey, whichanalysed the reduction in greenhouse gas (GHG) emissions between 2014-2019 for 300+ companies.
-- 33% of product purchased in the financial year was sustainably sourced5, up 16%pts year-on-year, in linewith our accelerated commitment to ensure all pure cotton items are organic by five years to 2025.
-- In FY21 33% of all garments containing organic, recycled, and low impact fibres including Tencel, Hemp,Yak or Linen generated around 35% of our AW20 and SS21 revenue.
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:
-- We remain committed to the high street and post year-end we announced our exit from Regent Street and ourmove to a prime higher footfall location on Oxford Street.
-- Won three logistics industry awards recognising our use of robotics, which has more than trebled our pickand put-away efficiency rates for Ecommerce returns.
-- As part of our continued lease renegotiations, we renewed 39 stores in FY21 representing an annualisedcash saving of GBP5.3m6. In addition, there were GBP7.7m of one-off rent savings recognised in FY21, and we aretargeting in excess of GBP10m in FY22.
The table below shows the revenue change on a 1- and 2-year basis for the 18-week period ending 28 August 2021:
Revenue change (%) vs FY21 (1-year) vs FY20 (2-year)
Group revenue 1.9% (29.6)%
Stores 33.1% (36.9)%
Ecommerce (34.4)% 8.2%
Wholesale 12.7% (35.8)%
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.
Whilst significant market uncertainty remains, we do expect a recovery in total revenue in FY22, driven by:
-- Improving store trading from gradually improving footfall throughout the year, although not reachinghistoric levels;
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