Lower Growth Forecasts Send Superdry Shares Sliding

LONDON, United Kingdom — Shares in Superdry tumbled 11 percent on Thursday after the fashion retailer said it expected 2018 full-year gross margins to decline and it gave a weaker than expected revenue forecast for 2019.

The company, whose trademark jackets, hooded tops and jogging bottoms are popular with young people, has come under pressure this year as its stores generated lower revenue and a spell of bad weather in March hit trading.

Larger British clothing retailer Next enjoyed a share bounce on Thursday thanks to an upgrade to its profit forecast after warmer weather in April led to better than expected quarterly sales.

For its part, Superdry said profit before taxation for the year to April 28, 2018 would be in the range of 96.5 million pounds to 97.5 million pounds, up 11.5 percent at the midpoint from last year.

It said gross margins were anticipated to have fallen year-on-year by around 200 basis points, due in part to a push to cut prices to lower the amount of inventory being held.

Group revenue for 2018 was up 16 percent but for the 2019 financial year it said it was targeting "high single-digit statutory revenue growth" as it manages "ongoing challenging conditions in stores".

Analysts at RBC said the margin guidance was disappointing while the 2019 revenue guidance also represented a cut to the consensus.

"While the consumer environment remains challenging, we are confident that Superdry's reputation for quality, design detail and strong value for money, underpinned by our continued investment in the business, leaves us well placed," Chief Executive Euan Sutherland said.

"We remain focused on the growth opportunities ahead and confident in the quality of sustainable earnings growth we can deliver over the long-term."

Recent British consumer data, surveys and company updates have been downbeat, adding to concerns of slow growth and distress in the retail sector.

By Ana de Liz; editor: Keith Weir.