Happy Superdry sees strong jacket, partywear sales, secures funding package

Superdry had good news on Thursday afternoon as the retailer released a first-half update and hailed a “positive start” to AW22. It also said its new financing facility has finally been agreed.

First the trading update. For the 26 weeks to 29 October, group revenue increased 3.6% year-on-year, “driven by strong performance in owned stores”. In fact, store revenue increased 14.4% as its collections “resonated well with customers”.

E-commerce revenue edged up 1.7% “as traffic moved from online and back to stores”, with jacket sales and AW22 performance from third-party sites being the key drivers of growth.

Combined, it meant total retail revenue was up 9.6%.

It’s all excellent news from a company that some were writing off not that long ago when it just seemed it was no longer a cool label to wear and its sales might never get back on a positive trajectory.

But there has been a stream of upbeat news in recent updates, especially this one. Not that everything was perfect on the sales front with wholesale revenue down 5.2% “following low levels of dispatches in October”, although these are expected to “partially reverse” in the second half. Margin dilution was in excess of 200bps, primarily from wholesale intake margin pressure.

CEO Julian Dunkerton said he was “pleased with the performance”, with some justification, not only because of Superdry’s previous well-publicised company-specific problems but because of the wider weak backdrop that has proved a problem for many retailers.

Dunkerton added that “it’s been well documented that conditions are extremely challenging, which weren’t helped by the unseasonably warm weather in October and into November. However, by combining great product with affordable prices, we managed to grow sales in the first half. 

“Our AW22 collection has been really well received by customers, especially our jacket range and party dresses, and it’s great to see store sales recovering well”.

Importantly too, he said the second half started well and has produced the firm’s “biggest ever week for e-commerce orders driven by a return to record levels of jacket sales over the Black Friday period and good momentum through the recent spell of colder weather”.

But he’s “under no illusions that consumer confidence is fragile and that the picture is unlikely to change quickly”.

And then there’s the financing package. The company has a new three-year facility, expiring in December 2025. It was important to secure the deal as its previous £70 million asset-backed lending facility was due to expire in January.

It now has a loan facility of up to £80 million, including a £30 million term loan, for three years with an option to extend for a further year, with specialist lender Bantry Bay Capital Limited. 

Given market conditions, the interest rate will be higher than its previous agreement but it said the revised facility is “operationally less complex to manage and covenant-light, giving us the necessary flexibility to navigate the current challenging macro-economic environment and continue to focus on driving our brand strategy forward”.