Superdry has agreed an additional £70m funding to help shore up its financial position after the pandemic compounded troubles at the fashion brand.
The high street retailer’s share price jumped more than 20 per cent on Monday as it said that trading during lockdown had been better than expected, although still sharply down on a year earlier.
Total sales fell by 24 per cent in the 13 weeks to July 25 as a near doubling of online revenues failed to offset the impact of a mandatory closure of stores during the peak of the coronavirus outbreak. Superdry would not disclose what its expectations on sales had previously been.
Nearly all the group’s shops have reopened but its store revenue in the quarter was 58 per cent lower than a year earlier, or 32 per cent on a like-for-like basis.
Superdry was struggling even before the pandemic struck. In January, the clothing group said its annual profits could be wiped out following a disappointing performance over the Christmas trading period.
The retailer said on Monday that it had agreed with its lenders, HSBC and BNP Paribas, to extend an asset-backed lending facility until January 2023, replacing one that was due to expire a year earlier.
“A lot of retailers have been heading into technical covenant breaches,” said John Stevenson, analyst at Peel Hunt.
Resetting these covenants for a “post-Covid world” had not proven difficult for companies still generating cash, Mr Stevenson added. “If there are more fundamental issues and your relevance is being questioned, then that is a more difficult conversation.”
Superdry had £58m cash on its balance sheet as of August 6, up from the £40m it reported in May and £2m a year earlier.
Mr Stevenson said liquidity would now not be something “troubling management or investors”.
Julian Dunkerton, Superdry’s co-founder and chief executive, said the new lending facility would give the company the strength to “secure our recovery”.
“I’m confident we can reset the brand and deliver on our transformation plans,” he said.
Mr Dunkerton, who last year returned to the company after a boardroom coup, has pledged to revive the brand’s original colourful design philosophy as well as increase product choice and reduce discounting.
However Superdry did warn that uncertainty from the pandemic would continue to “materially” affect the company this year.
The group’s share price was up 21 per cent at 142.9p by mid-morning on Monday but was still 70 per cent lower than at the start of this year.