Monday, 10 August 2020

Superdry Q1 beats expectations despite sales drop, gets new financing facility



Struggling fashion retailer Superdry had good news on Monday as it announced a new financing facility and that it's trading in recent months has been better than it was expecting, even though it remains down.

“Current trading in Q1 has been better than our initial expectations,” it said, “however, disruption from Covid-19 continues to materially impact our performance year-on-year”.

Q1 ran from late May to late July and the firm said total group revenue for the period was down 24.1%, “largely due to the impact of store closures as a result of Covid-19”. 

Gradual reopening began at the start of the quarter and around 95% of its stores have now reopened, with store revenue down 58.1% in Q1, equivalent to a 32.3% like-for-like decline. 

The company added that its wholesale partners, particularly franchises, have suffered the same headwinds and challenges as its owned stores and are down 31% year-on-year. But e-tail has continued to perform well, and was up 93.2% in Q1, although it has 'normalized' in recent weeks “as stores reopen and we trade against the promotional stance in the comparative period last year”.

Also positive is the fact that the company has entered into a new financing facility that, together with its strong net cash position, “gives us the necessary flexibility and liquidity going forward”. It has a new £70 million Asset-Backed Lending Facility running until January 2023. It replaces its existing facility that would have expired a year earlier.

As of early August, it had £57.8 million net cash on the balance sheet (vs £39.8 million net cash in early May and £2.1 million a year ago). 

CEO Julian Dunkerton said of all this: “The actions we have taken to date have greatly strengthened our cash position, which together with our new ABL Facility, give us the flexibility to execute our current plans and to secure our recovery. Together, we are making our way through this unprecedented period, and I'm confident we can reset the brand and deliver on our transformation plans.”

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