Half year report, Brexit risks, import duty, port delays, sterling, labour, IP

Superdry Plc – Half year report – 27 October 2018

Industry: retail

Principal risks and uncertainties

The principal risks and uncertainties were outlined in the 2018 Annual Report (pages 51-59) and they remain un-changed. These are described in note 17 of this document.

As the date for Brexit approaches, the Board continues to monitor the impact of the UK’s decision to leave the European Union and the uncertainty around the nature of the departure. The Group’s Brexit working party meets regularly to discuss the key risk and impacts of the Brexit decision and how these can be mitigated. The extent to which our operational and financial performance may be impacted in the longer term will only become clear as details are finalised. The Brexit working party will meet on a more regular basis once an agreement has been finalised and details published. We will continue to monitor the risks and uncertainties arising from Brexit within the Group’s existing risk management and control process as outlined in the 2018 Annual Report (pages 51-59).

The Group considers the following risks to be most relevant to Superdry:


The Group believes however that the risks arising are partly mitigated by the following factors:

  • Less than 30% of Global brand revenue is now generated in the UK;
  • We operate three distribution centres, including one in Belgium and one in the US. Mitigating actions could be taken such that only UK destined stock needs to be imported into the UK; and
  • We have a diversified supplier base in, but not restricted to, Turkey, China and India.

Explanatory Notes to the Interim Financial Information (unaudited) (extract)

  1. Principal risks and uncertainties

The principal risks and uncertainties were outlined in the 2018 Annual Report (pages 51 to 59). These remain un-changed and were as follows:

  • Damage may occur to the Superdry Brand or the Brand may lose its resonance;
  • The Brand and Group’s business may suffer from any failure to meet consumer needs and address consumer trends leading to a product range that is insufficiently differentiated or unattractive to target customers.;
  • Failure to deliver the global strategy;
  • Failure to deliver on our growth aspirations in the Group’s key future development markets;
  • Loss of key colleagues or the inability to attract and retain talent or preserve the Superdry culture;
  • Negative impact driven by our response to economic conditions;
  • Lack of availability of infrastructure or IT systems (due to operational constraints or a major incident) or com-promise of data (either accidentally or maliciously) held by Superdry or key third parties;
  • Failure to comply with legal and regulatory frameworks;
  • Risk of significant changes in currency exchange rates;
  • Global supply chain disruption and / or raw material shortage;
  • Ecommerce revenue growth, reflecting our position as a digital brand, is key to the ongoing development of the business;
  • The ongoing consumer preference shift towards digital shopping channels; and
  • Brexit (the exit of the UK from the European Union) potentially introduces risks to operations, including in-creases in tariffs on goods and delays in their global movement, availability of labour and instability in the global currency market.