A fashion retailer with shops in Tayside and Fife has warned there are doubts over its ability to continue trading.
Fashion retailer Superdry told investors there was “going concern” risks due to uncertainty about the recovery in consumer demand.
Superdry has shops in Dundee’s Overgate Shopping Centre and St Andrews’ Market Street.
The firm said risks associated with consumer demand and its ability to meet its debt arrangements “cast significant doubt on the group’s ability to continue as a going concern”.
It came as the company reported an £18.9 million pre-tax loss for the half-year to October 24.
Call for rates overhaul
However, founder Julian Dunkerton claimed the firm has a “strong financial footing” for 2021.
“We are strong and have £130m 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.”
Internet sales not making up for shop closures
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.
There was 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.
Shares fall on update
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,” he added.
“This has continued through the first half and into the second with renewed lockdowns in our key markets.
“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 closed down 39p at 201p, a fall of 16.25%.
Bloodbath on the High Street
Debenhams will shut all its stores by March at the latest unless a remarkable rescue deal is secured.
Sir Philip Green’s fashion empire Arcadia has also entered administration.
Its plus-size clothing brand Evans became the first in the stable to be bought out of retail giant’s administration process in December. But the deal will not include brick and mortar stores, just the online business.
Several companies are eyeing bids for Arcadia’s Topshop operation, including Next.
Edinburgh Woollen Mill has come out of administration but some shops are to close.
Oasis and Warehouse wound up its retail business in April, with the loss of 1,800 jobs.
Argos also announced its intention to shut all standalone shops.
Meanwhile companies such as Marks & Spencer and River Island have also cut staff.
Earlier this month doubts emerged over the future of Paperchase.