Shares in Supergroup, the fashion retailer behind the Superdry brand, have tumbled despite recording a jump in sales on the back of the weaker pound.
Sales rose by 27.2pc to £750.6m for the year to April 29. The recent fall in the value of sterling accounted for around a third of its growth across the retailer, which has shops in 62 different countries.
Like-for-like sales across the group rose by 12.7pc during the year, helped by its booming internet business where sales grew by 35pc across the year.
However, Supergroup’s shares plunged by as much as 7pc as analysts were disappointed by the lack of a profit upgrade and sounded a note of caution about the retailer’s drop in gross margins from 140 basis points to 120 basis points.
Analysts at Liberum warned that Supergroup, which recently launched an upmarket collaboration with Luther star Idris Elba to target more mature customers, “could be up against challenging comparators if these foreign exchange dynamics unwind”.
Adam Tomlinson at Liberum also highlighted that there was a “lack of operational gearing benefits being delivered” and said that more should be done on integrating its online and shop operations rather than investing in store openings in Europe.
The company said that pre-tax profits would be in line with forecasts at around £86m to £87m, compared to £73.5m last year. It also warned that margins had fallen due to increased sourcing costs and the strength of its wholesale division against sales at its own shops.
The FTSE 250 business has rolled out more shops around the world, and now counts a total 555 shops compared to 475 last year. Supergroup said that it expects its US business to be “break-even” following strong online sales.
Analysts at Peel Hunt said that the company was still one of the “few clear growth stocks in the retail sector”. “This business has been successfully repositioned and is now starting to benefit from an accelerating retail roll-out against the backdrop of a relatively distressed market place,” said John Stevenson at Peel Hunt.
Euan Sutherland, chief executive, said that it had been “another good year of sales and profit growth”.
“This has been achieved by improving our product ranges and introducing new categories to excite, inspire and maintain the brand’s relevance while, in parallel, investing in our development markets and improving our infrastructure,” Mr Sutherland added.
“With a clear strategy and a number of long term opportunities to establish Superdry as a global lifestyle brand we remain confident in the continued delivery of sustainable revenue and profit growth.”