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    SGP   GB00B60BD277

SUPERDRY PLC

(SGP)
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Delayed Quote. Delayed London Stock Exchange - 10/19 11:35:08 am
270 GBX   +2.66%
10/14SUPERDRY PLC : Director/PDMR Shareholding
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09/30SUPERDRY PLC : Total Voting Rights
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09/28SUPERDRY PLC : PDMR Notification
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Superdry Plc - Preliminary Results announcement -5-

09/16/2021 | 02:01am EDT

Under IFRS 8 'Operating Segments', Superdry has historically reported the performance of Stores and Ecommerce under one segment entitled 'Retail' (FY21 GBP342.3m; FY20 GBP438.8m). However, due to a significant shift in consumer behaviour and a material increase in the Ecommerce sales mix during the pandemic, the Group has chosen to focus on these channels separately in the management of the business with distinct reporting and decision making. The Board has therefore taken the decision to report across three segments for revenues and gross profit from FY21 onwards - Stores, Ecommerce and Wholesale.

The prior year comparatives have been restated to provide the same level of information for those three segments. The term Retail will continue to be used to group together the Ecommerce and Stores segments for multi-channel reporting.

Stores

Store revenue declined 51.1% to GBP140.5m in FY21. The significant impact of the enforced store closures was felt throughout the year, with an average of 39%1 of store trading days lost in FY21 (FY20: 10%).

Lost store days  Q1  Q2 Q3  Q4  FY 
%1 
FY20             -%  -% -%  42% 10% 
FY21             43% 4% 43% 69% 39% 
YoY              43% 4% 43% 27% 29% 

Even when the stores were able to trade, the high street experienced substantially reduced footfall from social distancing measures. There was no material change to the permanent store footprint in FY21 with only 10 net stores closures (FY20: 7 net closures), bringing the total owned estate to 231 stores at the year end (FY20: 241). Post year-end we announced the exit from our Regent Street store and our forthcoming move to a prime high-footfall location on Oxford Street, due to open in late 2021.

Though it currently appears unlikely we will see further widespread lockdowns in our major trading markets, we do anticipate ongoing suppressed footfall to continue throughout FY22.

Store revenue by territory**  2021  2020* Change 
                              GBPm    GBPm 
UK and Republic of Ireland    57.4  143.2 (59.9)% 
Europe                        64.6  107.4 (39.9)% 
Rest of World                 18.5  36.6  (49.5)% 
Total Store revenue           140.5 287.2 (51.1)% 

*Fulfil From Store ('FFS') sales reallocated to Ecommerce in the current year (GBP8.3m) and prior year (GBP1.6m) comparatives. FFS relates to sales made online but fulfilled from store stock.

**Please note for all channels the geographic territories have been aligned to the internal management operational structure.

Ecommerce

Ecommerce performance, which is a combination of sales made through our owned websites and those made online through third parties, was strong throughout the year, up 33.1% year-on-year. This partially offset lost Store sales, benefitting from Covid-driven changing shopping habits, improved product and increased digital marketing, as well as our influencer led strategy.

Ecommerce participation as a percentage of total Retail revenue (defined as the total of Store and Ecommerce revenue) increased from 34.5% to 59.0% which in turn drove Ecommerce revenue as a participation of total Group revenue from 21.5% to 36.3%.

Retail revenue                                      2021  2020* Change 
                                                    GBPm    GBPm 
Stores                                              140.5 287.2 (51.1)% 
Ecommerce                                           201.8 151.6 33.1% 
Total Retail revenue                                342.3 438.8 (22.0)% 
Ecommerce revenue as a proportion of Retail revenue 59.0% 34.5% 24.5%pts 
Ecommerce revenue as a proportion of Group revenue  36.3% 21.5% 14.8%pts 

* Fulfil From Store ('FFS') sales reallocated to Ecommerce in the current year (GBP8.3m) and prior year (GBP1.6m) comparatives. FFS relates to sales made online but fulfilled from store stock.

At the end of the year, Superdry had 21 branded websites, translated into 13 languages (FY20: 18; 13).

Ecommerce revenue by territory**  2021  2020* Change 
                                  GBPm    GBPm 
UK and Republic of Ireland        109.1 69.5  57.0% 
Europe                            78.0  68.7  13.5% 
Rest of World                     14.7  13.4  9.7% 
Total Ecommerce revenue           201.8 151.6 33.1% 

* In the prior year all eBay sales were allocated between UK and RoW. In FY21 eBay has been allocated to the relevant territory for clarity. To ensure consistent comparatives, this methodology has been applied retrospectively to FY20.

** Please note for all channels the geographic territories have been aligned to the internal management operational structure.

Wholesale

Wholesale sales to third parties, which includes online platforms where the partner fulfils the order, faced similar pandemic-related market shifts as our owned channels. This led to sales ending the year down 19.5% at GBP213.8m and higher levels of stock carried forward.

At the end of the year, the Group had Wholesale operations in 53 countries (FY20: 61) including 448 franchise stores (FY20: 473) and 27 Superdry branded license stores (FY20: 26).

Wholesale revenue by territory**  2021  2020* Change 
                                  GBPm    GBPm 
UK and Republic of Ireland        31.0  41.8  (25.8)% 
Europe                            140.9 170.6 (17.4)% 
Rest of World                     41.9  53.2  (21.2)% 
Total Wholesale revenue           213.8 265.6 (19.5)% 

* In the prior year Russia and Ukraine were included within Europe. In FY21 these territories have been reallocated to Rest of World in line with the internal management structure. To ensure consistent comparatives, this methodology has been applied retrospectively to FY20.

** Please note for all channels the geographic territories have been aligned to the internal management operational structure.

Gross margin

The gross margin has reduced by 90bps to 52.7%, partly driven by the mix effect of sustained stores closures (our highest gross margin channel) which contributed (1.4)%pts and elevated levels of discounting whilst the business focused on cash generation during the pandemic. These elements were partially offset by an improvement in the Wholesale gross margin.

Encouragingly, there was positive momentum in Q4 21 as we began to return the business to a full price trading stance, with particular success online where the full price mix2 increased by 11%pts to 46%.

Gross margin by channel  2021  YoY Sales  2020* Change 
                               mix change 
Stores                   66.6% (16%)pts   67.0% (0.4)%pts 
Ecommerce                58.2% 15%pts     59.7% (1.5)%pts 
Wholesale                38.4% 1%pts      35.7% 2.7%pts 
Total gross margin       52.7%            53.6% (0.9)%pts 

* Fulfil From Store sales have been reallocated to Ecommerce, with an impact on margin of GBP5.2m in the current year and GBP1.0m in the prior year comparatives.

Total operating costs

                                                2021    2020    Change 
Selling and distribution costs                  (258.7) (342.0) (24.4)% 
Central costs                                   (62.9)  (70.1)  (10.3)% 
Impairment credit/(losses) on trade receivables 3.8     (9.2)   (141.3)% 
Other gains and losses                          19.3    9.1     112.1% 
Total operating costs pre-adjusting items       (298.5) (412.2) (27.6)% 

Total operating costs, pre-adjusting items, reduced by GBP113.7m to GBP298.5m (FY20: GBP412.2m) and includes store, distribution, marketing, head office, central and depreciation costs, impairment credit/(losses) on trade receivables and other gains and losses. The decrease was partially caused by the disruption from Covid-19 in FY21, predominantly related to the temporary closure of stores, together with other continued cost actions taken to improve efficiencies as we preserved cash through the pandemic. There are some material movements in lease costs which are addressed more fully below.

Store costs reduced substantially by GBP47.9m, as a result of both one-off benefits and the impact of operational efficiencies. In FY21 we received GBP7.9m of furlough support for store employees and a further GBP2.5m of government grants, as well as a GBP15.7m benefit from UK rates relief. We have made good progress on recurring cost reductions in order to drive cost efficiencies, with payroll reducing GBP11.5m year-on-year, as we optimised our store staffing.

Distribution, marketing and head office costs decreased by GBP21.8m. The main driver was the reduction in the Wholesale bad debt charge, as a result of cash collections throughout FY21 being better than initially expected at the FY20 year-end. This was partially offset by volume-driven Ecommerce distribution costs, and a planned investment in both brand and performance marketing in line with the brand reset.

Depreciation and amortisation totalled GBP53.4m (FY20: GBP87.2m). The year-on-year reduction of GBP33.8m was predominately due to the impact of the prior year impairment of store-related assets.

Adjusted other gains and losses (which include royalty income and other income, largely related to lease renegotiations under IFRS 16) were GBP19.3m (FY20: GBP9.1m), an increase of 112.1%. Although there was a reduction in royalty income following the decrease in Wholesale revenue, this has been more than offset by GBP14.3m of accounting gains on termination of leases, lease breaks or lease modifications under IFRS 16.

Adjusted other gains and losses                2021 2020 Change 
Royalty income                                 4.2  7.2  (41.7)% 
IFRS 16 lease modification and renegotiations  14.3 -    100.0% 
Other income                                   0.8  1.9  (57.9)% 
Total adjusted other gains and losses          19.3 9.1  112.1% 

Central costs (GBP62.9m) includes head office costs and related depreciation which are not attributable to any of the trading channels, and have decreased by GBP7.2m as a consequence of cost control activities including a reduction in professional fees and discretionary spend.

Lease renewals

(MORE TO FOLLOW) Dow Jones Newswires

September 16, 2021 02:00 ET (06:00 GMT)

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Financials
Sales 2022 667 M 921 M 921 M
Net income 2022 7,00 M 9,66 M 9,66 M
Net Debt 2022 227 M 314 M 314 M
P/E ratio 2022 31,3x
Yield 2022 0,28%
Capitalization 216 M 298 M 298 M
EV / Sales 2022 0,66x
EV / Sales 2023 0,59x
Nbr of Employees 3 782
Free-Float 69,0%
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Mean consensus OUTPERFORM
Number of Analysts 7
Last Close Price 263,00 GBX
Average target price 359,29 GBX
Spread / Average Target 36,6%
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Managers and Directors
Julian Marc Dunkerton Chief Executive Officer & Non-Executive Director
Shaun Simon Wills Chief Financial Officer & Executive Director
Peter Olov Urban Sjölander Chairman
Silvana Bonello Chief Operating Officer
Helen A. Weir Senior Independent Non-Executive Director
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