Fashion chain gets hung out to Superdry

Superdry owner SuperGroup has been forced to slash its profit forecasts after an accounting blunder.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013
It’s the second profit warning for the group this year. Back in February, SuperGroup warned that its pre-tax profits were slipping, down to between £50m and £54m after disappointing January sales. Now, that figure has been revised again. The company will only earn about £43m it reckons. But not through bad business, through bad accounting, it insists.

A statement released by SuperGroup this morning blames an ‘arithmetic error’ worth £2.5m for the sudden fall in performance. Someone actually mixed up a minus sign with a plus sign in their workings out. It’s all rather ridiculous: MT wonders whether they've lost their abacus in the accounts department.

From Monday, it's going to be a baptism of fire for new kid on the block Shaun Wills. He takes on the FD role from Chas Howes, who is leaving to find a role that is 'less demanding of his time'.

Of course, the ‘error’ accounts for only a small part of the problems. There’s also the small matter of a £2m shortfall in its wholesale business, with orders from big retailers arriving later than anticipated. And there’s the fact that margins have been increasingly squeezed, while management costs have risen substantially – a few new and expensive executives have recently joined the company. That adds up to another £2m hit to the balance sheet.  

SuperGroup shares plunged by almost a third in early trading to 375p. But this is just another chapter in the epic decline of the company. Over the past 12 months its shares have fallen 75%. Chief executive and founder Julian Dunkerton (who was in our MT Top 100 Entrepreneurs list) has blamed mass discounting by other fashion brands for its poor financial performance. But only in February, Dunkerton went out on a limb to announce that Superdry’s earnings were back on the up, helped along by falling cotton prices and the end of the January price-cutting.

Of course, he spoke too soon. SuperGroup’s full-year profit is now forecast to peak about £5m down on last year’s showing. Despite today’s retail figures indicating a 1.8% jump in sales, it’s clear that this brand is still in Super-drought…

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