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Superdry burnt again by warmer weather

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Superdry burnt again by warmer weather
FILE PHOTO: People leave a Superdry store in central London, Britain July 9, 2015. REUTERS/Paul Hackett   -   Copyright  Paul Hackett(Reuters)
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(Reuters) – Superdry Plc <SDRY.L> sales continued to suffer from unusually warm weather through the British fashion chain’s two biggest trading months in November and December, prompting it to warn on Wednesday of an 11-million pound hit to profit last month.

The company, which has been striving to reduce its reliance on warm-weather clothing, said it had been going through a “difficult trading period” and said it expects to take another hit on profits in December if trading conditions do not improve.

Superdry also forecast that its underlying profit before tax for the year could almost half compared to 2017 and pre-market indicators pointed to a 10 percent fall in shares on opening on Wednesday.

The company’s full-year profits tend to be heavily influenced by its performance in the second half, due to the popularity of its cold-weather jackets and sweaters, which account for 55 to 60 percent of autumn/winter sales.

Superdry shares have been falling all year, but they sank in October after it warned that full year profit would fall short of market expectations as Britain recorded its hottest summer in living memory.

The FTSE 250 company joins a growing list of European retailers, including the suit company Moss Bros Group <MOSB.L> and online fashion vendor Zalando SE <ZALG.DE>, that have financially suffered because of the unusually warm weather.

The company has been spending heavily to diversify its product range and reduce its reliance on winter clothing.

The moves however have roughly halved its underlying operating margins to 3.6 percent this year compared to last, with selling and distribution costs rising by 8.4 percent for the first-half ended 27 Oct.

(Reporting by Karina Dsouza in Bengaluru)

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