SuperGroup issues warning after mix-up

Shares in SuperGroup lost more than a third of their value on Friday after the clothing retailer issued its third profit warning in six months, partly because of a mix-up between a plus sign and a minus sign in its forecasting.

The owner of the Superdry brand said that partly as a result of “arithmetic errors” its pre-tax profit would be about £43m for the year to April 29 – a marked reduction from its guidance in a previous profit warning in February, when it had predicted a figure of about £50m.

SuperGroup shares fell 38 per cent to 351.80p, after the fourth profit warning since its float just over two years ago, valuing the group’s equity at £283m. The shares now stand about 30 per cent below their 500p float price.

The company said it was “terribly embarrassing to have to come to the market and say we have made a mistake”.

It had made an error in its forecast for its wholesale business, where a negative figure had accidentally been treated as a positive during the forecasting process, it said. The adding-up mistake accounted for £2.5m of the profit shortfall.

Julian Dunkerton, chief executive, said the company had been growing fast but recognised that there were weaknesses that it was addressing, citing recent executive appointments that would bring more “formality” to the business.

But John Stevenson, analyst at Peel Hunt said: “This is the latest in a fairly long list of communication errors and problems, and from our point of view it is one too many.”

Mr Dunkerton, who owns 32 per cent of the company, said he had no intention of resigning after the latest profit warning.

“I feel that would be a little harsh,” he said. “Nobody is more affected than myself if you look at the share register. You must understand that my devotion to this company is 100 per cent, and I have nothing but its progress and its success embedded in my psyche.”

SuperGroup said there was a separate profit shortfall of £2m in its wholesale business resulting from demand for stock coming later than expected, although it said most of those sales would fall into its next financial year.

In addition, SuperGroup said its margins had been hit by a greater-than-expected proportion of its sales going through lower-margin channels such as eBay and outlet stores, while an increase in operating costs partly linked to new executive hiring had also been a factor.

Together, these two issues would have a further impact of about £2m on profit, it said. The company said all the problems would have a “minimal impact” on its projections for its next financial year.

SuperGroup is awaiting the arrival of a new chief financial officer, Shaun Wills, who is due to start work at the company on Monday.

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