Superdry lowers guidance, considering 20 percent capital raise

Superdry is continuing to tackle a “challenging trading environment” as it announced the withdrawal of its “broadly breakeven” profit guidance for FY23.

In a regulatory filing, the British fashion firm said that revenue is now expected in the range of 615 to 635 million pounds, up from 609 million pounds in FY22, a slower rate than it initially anticipated.

While progress is being made with the recovery of wholesale partners and the Asia Pacific region is on track to deliver 34 million pounds in net proceeds, Superdry said that retail sales in February and March had still not met expectations despite a “significant” YoY growth.

The company attributed the slow down to factors outside of its control, such as the cost-of-living crisis and poor weather, causing less demand for its spring/summer collection and a lag in wholesale performance.

It added that the board’s decision to withdraw the previously issued guidance came down to the actions surrounding the reorganisation of its wholesale division, which ultimately made the assessment of its full year difficult.

Superdry will continue to go ahead with a turnaround plan based on a simplified business model, through which it is targeting three pillars: inspiring through product and style, engaging through social and leading through sustainability.

Founder to offer material support for potential equity raise

In order to achieve such an aim, the company has validated over 35 million dollars in initial cost savings, achieved through estate optimisation, logistics and distribution savings, among other elements. The savings are expected to be realised by the end of FY24.

While Bantry Bay, Superdry’s lender, has agreed to waive specified borrowing limits, the company also noted that it was considering further steps to bolster its balance sheet in connection with its turnaround plan, including a potential equity raise of up to 20 percent of its share capital.

According to the filing, Superdry founder and CEO, Julian Dunkerton, is fully behind such a move and will materially support the raise, which is still subject to shareholder approvals. It must be noted that currently there is “no certainty” that such a decision will proceed.

In a statement, Dunkerton further emphasised the challenging nature of the current market, noting that the company needed to ensure it was in the “right shape to navigate these difficult times”.

He continued: “My belief in the Superdry brand is stronger than ever which is why I’m prepared to provide material support to any equity raise undertaken. I am confident that we have the right plan and, working together as a team, the business will emerge from the current turbulence stronger than ever.”