SuperGroup fires off shock profit warning

Shares plunge 25% after warehouse computer glitch wiped £9m off profits of company behind Superdry fashion brand
SuperGroup's Superdry store in Covent Garden
SuperGroup's Superdry store in Covent Garden. Photograph: Martin Godwin for the Guardian Martin Godwin/Guardian

SuperGroup, the company behind the fast-growing Superdry brand, has fired off a shock profit warning after a computer glitch at its warehouse waylaid despatch of its bestselling T-shirts and hoodies to stores.

The shares dropped 25% in morning trading on Wednesday after a misfiring IT system resulted in products being dispatched in small and extra large but not the sizes in between, leading to depleted sales. The company said the upset would wipe up to £9m off this year's profits.

The retailer also had to rent temporary warehouse space to take the strain off the main site in Barnwood, Gloucestershire. The systems upgrade was supposed to increase efficiency but instead £2m of stock was wrongly left sitting in the main warehouse.

Its finance director Chas Howes, who is also responsible for IT, said the hiccup was a "temporary, isolated event" and would be resolved ahead of the key Christmas trading period. He said the "majority" of systems issues had already been rectified but some were "ongoing". Howes said the total cost of the upset, including the extra warehousing and lost sales, would reduce this year's profits by between £6-9m.

Shares in the Cheltenham-based firm, started by chief executive Julian Dunkerton, was one of the most successful stock market listings of last year, with the shares hitting a high of £18.99 after listing at 500p. This morning the shares were down 255p at 749.5p.

During its short time on the public markets SuperGroup has made several PR disasters, including bungling a warning about the possible impact of the high cotton price on its profit margins. These mis-steps have shaken investor confidence in the fast-growing business which saw sales increase 71% to £237.9m last year.

Espirito Santo analyst Sanjay Vidyarthi said: "It is difficult to disentangle how much of this warning relates directly to the warehouse issue and how much could be a function of weaker underlying demand. This is SuperGroup's second stock-related issue of the year and highlights one of our key concerns regarding the risks of such rapid growth and that visibility on how and when things go wrong is low."

Dunkerton has batted away any suggestion that the popularity of Superdry, like FCUK before it, has started to wane. He declined to comment on the share price, stating "the market would have to make up its own mind" but added: "This is just a setback, the business continues as normal."

Seymour Pierce analyst Freddie George, who cut his price target for the stock from £20 to £15, said: "We have always maintained that sales would be volatile and there would also be a chance of a hiccup along the way." He said SuperGroup had an "exceptional track record" with profits still expected to be up nearly 20% this year.