Superdry Warns on Profit After U.K. Holiday Shopping Slump

(Bloomberg) --

U.K. retailers’ holiday tale of woes continued as apparel chain Superdry Plc said lower-than-expected sales for the period could wipe out its annual profit, sending its shares reeling.

Another retailer, JD Sports Fashion Plc, said Friday its full-year earnings will be in the upper range of previous guidance, but that was largely because of stronger performance outside the U.K.

The updates follow downbeat reports from the likes of Marks & Spencer Group Plc and John Lewis Partnership Plc, which struggled over the holidays as shoppers shift from bricks-and-mortar stores to e-commerce and discounters take advantage of consumer jitters linked to the country’s recent political turmoil.

The British Retail Consortium, a trade group, said earlier this week that 2019 was the worst year for U.K. retail on record.

After the latest in a series of lower forecasts, Superdry’s shares fell as much as 24% in London, having lost more than four-fifths of their value in the past two years. JD Sports was little changed.

Joules Group Plc, a small clothing designer that warned of disappointing results, plummeted 34%. B&M European Value Retail SA fell as much as 7.5% after the discount retailer reported sales growth that disappointed analysts.

Founder Returns

Superdry said it had lower-than-anticipated retail sales since Black Friday and now expects adjusted pretax profit of zero to 10 million pounds ($13 million). The company, known for its faux-Japanese branding, said the period was marked by unprecedented levels of promotional activity and subdued consumer demand immediately after Christmas. Founder Julian Dunkerton returned last year to lead the chain after leading a campaign against the previous management team.

JD said pretax profit for the year will be in the upper quartile of market expectations, which range from 403 million to 433 million pounds after adjustments for a transition to new accounting standards.

Despite the challenges in the U.K. market, JD said sales rose on a like-for-like basis particularly overseas following an expansion drive that included the acquisition of Finish Line Inc. in the U.S. in 2018. The company, which relied on the U.K. for about four-fifths of its revenue five years ago, now gets about 55% of sales from abroad, especially from the U.S. and continental Europe.

To contact the reporter on this story: Eric Pfanner in London at epfanner1@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Thomas Mulier

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