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Founder plots Superdry revival after profit warning

Founder plots Superdry revival after profit warning
FILE PHOTO: A woman walks past a window display at a Superdry store in London, Britain, March 1, 2019. REUTERS/Toby Melville   -   Copyright  TOBY MELVILLE(Reuters)
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By Tanishaa Nadkar and Noor Zainab Hussain

(Reuters) – Superdry warned again of a shortfall in annual profits on Thursday as founder Julian Dunkerton began efforts to revitalise the British fashion retailer after winning control in a bruising boardroom battle.

Shares in the company initially fell as much as 8 percent before recovering to trade 1.2 percent higher within a volatile first 35 minutes of trading.

Superdry has issued a string of profit warnings, the latest in December, and its shares have slumped 75 percent over the last year, as it struggled to expand beyond its core business in trademarked winter hoodies and jackets.

Lower revenue in the Christmas quarter also rang alarm bells with investors, who voted to hand back operational control of the company to Dunkerton in April. Dunkerton’s return prompted the exit of most of its board members and his appointment as interim chief executive officer.

The company said it would miss market expectations for underlying pretax profit for the year to April 27 which had been seen in a range between 54.1 million pounds to 59.4 million pounds. It had guided to profit of between 55 million pounds and 70 million pounds in December.

“There’s a lot to do, but after five weeks, I am more confident than ever that we can restore Superdry to being the design led business with strong brand identity I know it can be,” Dunkerton said.

Launched as a clothing stall at Cheltenham market in western England, Superdry owns a network of 139 stores across the UK and mainland Europe, and has a further 208 franchised and licensed stores, all but one outside the UK.

Superdry said on Thursday its performance continued to be weak but that Dunkerton had already taken actions to increase the number of products sold online and raise stock levels in selected stores.

He has also cut promotional activity, helping margins, and expects to launch 500 new products in the first six months.

The company said revenue was unchanged for the financial year 2019 at 871.7 million pounds ($1.14 billion), but declined 4.5 percent in the fourth-quarter, with poor performance in its wholesale and ecommerce businesses.

“Whilst it may be too soon for the recent major boardroom reshuffle at Superdry to have any meaningful impact on financial results, the company’s pre-close update makes very clear that change is under way,” Edison Investment Research analyst Kate Heseltine said.

(Reporting by Tanishaa Nadkar and Noor Zainab Hussain in Bengaluru; Editing by Patrick Graham/Keith Weir)

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