Fashion retailer Superdry has warned there are doubts over its ability to continue as a going concern after further lockdown measures battered its revenues.
Shares in the brand slid on Tuesday morning after it also posted significantly wider losses.
Superdry slid to an £18.9 million pre-tax loss for the half-year to October 24, as the pandemic put its turnaround strategy on hold.
It told investors that risks associated with current uncertainty and the recovery in consumer demand “represent material uncertainty and may cast significant doubt on the group’s ability to continue as a going concern”.
However, founder Julian Dunkerton told the PA news agency that the firm has a “strong financial footing” for 2021.
“The going concern is a technical reporting point that people have picked up on but we are strong and have £130 million in liquidity so are well positioned,” he said.
“In March, we knew nothing about what the crisis would entail but we’ve adapted and now our cash position is ahead of the market.
“The Government has made two positive steps with the furlough – which has been fantastic – and the rates holiday, but there really needs to be a full overhaul on rates.
“They can extend it again but it won’t mean much if they go back to massively inflated levels when it is over.”
The group said that, as of January 9, 173 of its stores were closed due to lockdown measures, representing 72% of its store portfolio.
It said this is the highest level of closures since April and it has a “material shortfall” in total sales against previous forecasts despite a 13.2% increase in Ecommerce sales in the past 11 weeks to January 9.
Total sales fell by 23.4% to £282.7 million in the six months to October, it revealed in the trading update.
A 49.8% increase in online sales was only partly offset the impact of lower store revenues, which slid by 44.8% over the period.
The group said it expects “prolonged store closures and subdued footfall” in early 2021 to continue to weigh on revenues, although shortfalls will be partially offset by rent waivers and furlough payments.
Mr Dunkerton said the brand has continued to focus on its “reset” plan but it will take time to see the benefits in trading results.
“Covid-19 has brought substantial challenges to Superdry as with many other brands, and this has continued through the first half and into the second with renewed lockdowns in our key markets,” he added.
“Our team has responded incredibly well and above all we’ve been focused on looking after our colleagues and customers and ensuring everyone is keeping safe.”
Shares in Superdry were 12.3% lower at 210.47p after early trading.
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