Fashion retailer Supergroup has seen a sharp fall in sales growth during the final quarter of a financial year dogged by stock management and financial accounting errors, results released today reveal.
Although total sales increased 24.7 per cent in the 13 weeks ending April 29th 2012 to £75.2 million, much of this growth was through new stores, and like-for-like trading actually fell flat over the period.
Wholesale trading reported the slowest growth of any division within the retail group, which operates the Superdry and Cult fashion labels, with total sales only growing 4.4 per cent largely due to the increasing number of standalone Superdry stores in its core UK market.
Fourth quarter wholesale performance was also dragged down by delays to franchise stock shipments, as reported in April along with arithmetic errors in its accounting, which added to the warehouse issues experienced earlier in the year which all damaged the company’s reputation among investors.
Supergroup CEO Julian Dunkerton commented: “’Although the fourth quarter has been a disappointing end to a challenging year, the brand remains strong and this, together with the group’s investments in key senior personnel and system infrastructure, provides a solid platform for the coming financial year.”
Retail sales were up 24.7 per cent in the fourth quarter and totalled an impressive £147.4 million for the full-year, an annual increase of 29.6 per cent, as the retailer hit its full-year target of 20 UK store openings, with 19 news stores and one relocation during the period.
During the year the group opened 50 more stores internationally taking its total of overseas shops to 130, which includes 24 in mainland Europe.
Retail analyst Simon Chinn, of consultancy Conlumino, argues that the group seems to have overcome short-term setbacks and that the decline in wholesale revenues is somewhat inevitable.
However of more concern to the retailer, according to Chinn, is keeping its limited brands feeling current in the ever-changing youth fashion market.
“Over expansion risks making the Superdry brand even more ubiquitous than it is alreadybecoming,” Chinn said.
“The brand remains strong for now, but how long that will last is debateable. Fashion is fickle and clothing brands that rely on the brashness of a single logo/design risk a sudden downfall, French Connection’s experience with its FCUK is a case in point.”