Superdry PLC (LON:SDRY) today announced special dividend as it delivers double digit growth in sales and profits.
Key Financial Highlights
· Global Brand revenue1 up 22.1% to £1.60bn (2017: £1.31bn), with growth in all key territories
· Group revenue up 16.0% to £872.0m (2017: £752.0m) led by capital light channels:
o Wholesale revenue up 29.6%, including eight new markets reached in the year
o Retail revenue up 9.2%, driven by Ecommerce revenue up 25.8%, increasing participation to 29.7%, with store revenue up 3.4%
· Underlying1 profit before tax up 11.5% to £97.0m (2017: £87.0m)
· Statutory profit before tax down 23.0% to £65.3m (2017: £84.8m), reflecting the fair value movement on forward exchange contracts and impairment of the Berlin Kranzler store
· Underlying1 basic earnings per share (“EPS”) up 10.8% to 93.6p (2017: 84.5p)
· Full year ordinary dividend of 31.2p per share, up 11.4%, together with special dividend of 25.0p per share, as a result of continued strong cash generation
· FY19 revenue and operating margin expansion guidance unchanged from Q4 trading statement
Operational and Strategic Progress
· Global Digital Brand:
o Successful expansion of integrated digital and social media campaigns
o Strong global brand health, driven by increasing consumer engagement across digital platforms
· Relentless Innovation:
o Successful launch of Superdry Sport as a standalone brand, enhanced by sponsorship of UK Invictus Games team
o Leadership of core jackets category reinforced with launch of premium down range
· Operational Excellence:
o Significant strengthening of Ecommerce position with industry-leading Order Management System
o Introduction of multi-channel capabilities to our Europe and US distribution centres
o Increased range harmonisation and successful trial of RFID in 5 stores
· World Market Opportunity:
o Launched additional country-specific websites for the US and Switzerland
o Net 75 new franchise stores opened, increasing franchised locations by 24%, mainly in EU
o Continued progress in North American and Chinese development markets
Euan Sutherland, Chief Executive Officer, commented:
“Superdry has had another strong year, enhancing our position as a Global Digital Brand with a multi-channel approach. We have made good progress in delivering our strategy and significantly strengthened our platform and capabilities, while delivering another year of double digit growth in sales and profitability.
“Our focus remains on executing our growth strategy and realising the potential we have identified across products, geographies and channels. In Superdry we have a brand that stands for quality, design, value for money and relentless innovation. Our eight routes to market mean we can continue to tailor by territory and channel, while our innovative approach to digital marketing means we can enhance our relevance to consumers around the world. This is underpinned by our culture of operational excellence, our people and our values.
“Whilst the consumer environment continues to be challenging, the Board remain confident that Superdry is a uniquely advantaged, highly cash-generative business that will continue to deliver sustainable growth for our investors. This confidence is demonstrated through our second special dividend in two years of 25p per share in addition to an 11.4% increase in the total ordinary dividend.”
|
Business Performance |
FY18 |
FY17 |
|
Global Brand revenue1 (£m) |
1,604.2 |
1,313.7 |
|
Total Group revenue (£m) |
872.0 |
752.0 |
|
Total Retail revenue (£m) |
548.6 |
502.5 |
|
Net new Retail space added (sq.ft. ‘000s) |
125 |
154 |
|
Average Retail Space (sq.ft. ‘000s) |
1,128 |
983 |
|
Number of stores at period end: |
|
|
|
– Owned |
246 |
220 |
|
– Franchised & Licensed |
412 |
335 |
|
Payback on new stores opened FY15-FY18 (months) |
24 |
25 |
|
Online participation (%) (as % of Total Retail revenue) |
29.7 |
25.9 |
|
Wholesale revenue (£m) |
323.4 |
249.5 |
|
Gross margin (%) |
58.1 |
60.2 |
|
Underlying1 operating margin (%) |
11.5 |
11.9 |
|
Underlying1 basic EPS (p) |
93.6 |
84.5 |
|
Operating cash flow (£m) |
104.3 |
82.0 |
|
Net cash1 position (£m) |
75.8 |
65.4 |
|
Return on Capital Employed (%)2 |
24.9 |
24.4 |
|
Statutory reporting |
FY18 |
FY17 |
|
Items excluded from underlying1 results (£m) |
(31.7) |
(2.2) |
|
Profit before tax (£m) |
65.3 |
84.8 |
|
Basic earnings per share (p) |
62.2 |
81.2 |
Notes:
1. ‘Underlying’, ‘Net cash’ and ‘Global Brand revenue’ are used as alternative performance measures (‘APM’). Definition of APMs and how they are calculated are included in note 23
2. Return on Capital Employed defined as Underlying profit before interest and tax / (Total assets – Current liabilities – Cash)
3. The trading comparatives for each quarter of FY18 are detailed below (unaudited):
|
FY18 |
Q1 |
YOY |
Q2 |
YOY |
H1 |
YOY |
Q3 |
YOY |
Q4 |
YOY |
H2 |
YOY |
FY18 |
YOY |
|
|
£m |
% |
£m |
% |
£m |
% |
£m |
% |
£m |
% |
£m |
% |
£m |
% |
|
Retail Revenue |
116.3 |
15.6% |
126.4 |
10.3% |
242.7 |
12.8% |
180.1 |
11.1% |
125.8 |
0.5% |
305.9 |
6.5% |
548.6 |
9.2% |
|
Wholesale Revenue |
|
|
|
|
159.3 |
34.1% |
|
|
|
|
164.1 |
25.6% |
323.4 |
29.6% |
|
Group Revenue |
|
|
|
|
402.0 |
20.4% |
|
|
|
|
470.0 |
12.4% |
872.0 |
16.0% |
|
Retail Global Brand Revenue |
137.6 |
15.4% |
149.5 |
10.2% |
287.1 |
12.6% |
211.0 |
10.7% |
147.4 |
0.1% |
358.4 |
6.1% |
645.5 |
8.9% |
|
Wholesale Global Brand Revenue |
|
|
|
|
469.2 |
34.4% |
|
|
|
|
489.5 |
31.6% |
958.7 |
32.9% |
|
Group Global Brand Revenue |
|
|
|
|
756.3 |
25.2% |
|
|
|
|
847.9 |
19.5% |
1,604.2 |
22.1% |
Revenue growth and margin expansion:
· High single digit statutory revenue growth, with the following channel specifics:
o Wholesale – mid-teens growth
o Ecommerce – mid- to high-teens growth
o Stores – anticipate ongoing challenging conditions
· Moderate expansion in operating margin of 20 to 50bps, driven by:
o Operational efficiencies
o Completion of the inventory rebase programme
o Return to breakeven in our North American development market
Disciplined investment continues:
· Space growth rebalanced towards capital light channels:
o Owned space to grow 4-5%, down from prior guidance of 8%
o ~60 franchised store openings, focused in the EU and US
· Capital – £50-60m investment, with a shift away from stores towards technology and infrastructure
Capital policy
· Ordinary dividend at 3.0x – 3.5x cover
· Return of excess capital when appropriate
Chief Financial Officer
Following the completion of a successful induction and handover process Superdry announces that Ed Barker is appointed as Chief Financial Officer with effect from the announcement of its preliminary results. Nick Wharton will cease to be Chief Financial Officer and a Director of Superdry Plc at that time.
