Superdry insisted its turnaround remained on track on Thursday despite rising inflationary pressures, as it returned to the the black.
The fashion retailer reported group revenues of £277.2m for the 26 weeks to 23 October, a 1.9% decline year-on-year and a 24.9% fall on the same period two years previously.
The gross margin improved, however, to 55.2% compared to 51.7% a year ago, which helped slash adjusted pre-tax losses to £2.8m from £10.6m in 2021.
On a statutory basis, pre-tax profits were £4.0m compared to last year’s £18.9m interim losses, although the figure was boosted by gains made on forex forward contracts.
Updating on festive trading, Superdry said revenues rose 19.6% in the 11 weeks to 8 January, as physical trading continued to recover, although it acknowledged footfall had been “suppressed” by the Omicron variant and a “significant reduction” in marked-down goods in the run up to Christmas.
It also warned that it expected to be affected by the surging rate of inflation going forward, with chief executive Julian Dunkerton telling the Press Association prices could rise by 2% as a result.
But despite that, the chain insisted it remained on track to meet targets. “Our performance over the peak trading period has given us confidence that we will achieve current market expectations for full-year adjusted pre-tax profits,” it said.
“In line with the rest of the sector, we expect to be impacted by inflationary cost pressures. However, we expect to fully offset these headwinds through further gross margin improvement – via a reducing mark-down mix – together with some price realignments in selected categories and markets.”
The retailer is actively pursuing a full-price strategy as part of a wider turnaround under founder Dunkerton. He rejoined Superdry in 2019 following a boardroom battle and a period of heavy losses.
Dunkerton said: “I’m really pleased with our progress against each of our strategic initiatives, with clear signs of brand and financial recovery. The health of the brand is best demonstrated by the improving sales run-rate, and a 12 percentage points increase in retail full-price sales mix.”
As at 1300 GMT, shares in Superdry were down 9% at 225.6p. They remain 1% up on the month.