Summer too dry for Superdry as profit shrinks in the heat

There are very few companies that would print the reason for their profit warning on loads of T-shirts. But for Superdry – purveyor of tight T-shirts emblazoned with that word – the writing has been on the wall, and the pectorals, all summer: it is going to make £10 million (€11.35 million) less profit because the weather’s been... super dry.

On Monday, the company said that “unseasonably hot weather conditions in the UK, continental Europe and on the east coast of the USA” in the summer and early autumn have significantly affected demand for autumn/winter products – particularly sweats and jackets, which account for about 45 per cent of Superdry’s annual sales. Who knew? Most of its customers only seem to wear T-shirts out. And T-shirts that are one size too small.

Apparently, the super dry weather and “the well-publicised challenges facing some of Superdry’s trading partners” will adversely impact profits for 2019 by about £10 million. At the same time, currency hedges that Superdry had put in place have not provided the protection the company expected. So that will lead to about £8 million (€9 million) in additional foreign exchange costs.

Share sale

All of which makes the lightweight look sported by co-founder and former chief executive Julian Dunkerton this summer seem particularly en vogue. In the middle of July, he divested himself of 5.5 million shares at 1,285p each, raising an estimated £71 million (€81 million).

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Admittedly, that share sale came after Mr Dunkerton announced in March that he was stepping down from the board to “devote more time to his other business and charitable interests”. And he still holds a circa 18 per cent stake. But it now looks like a savvy long-range weather forecast.

For Superdry, everything now depends on the second half of the year – that’s when it delivers 70-75 per cent of full-year profit. It will be hoping those Superdry T-shirt wearers felt chilly of late. On cooler days in September, Superdry “saw strong year-on-year performances, particularly from its cold weather product categories”.

– Copyright The Financial Times Limited 2018