SuperGroup suffers from rising cotton prices

15 December 2011

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15 December 2011 | Angeline Albert

Clothing retailer SuperGroup's half-year profits have been hit by rising cotton prices and increased distribution costs.  

According to the UK group’s interim results for the period which ended on 30 October, underlying operating profit showed a decline of £500,000 to £13 million compared with the same period in 2010. The drop was partly attributed to an increase to cotton prices. The report said there had been a “reduction in [operating] margin of up to 2 per cent for the full year driven by cotton price increases”.

SuperGroup has 72 Cult and Superdry retail stores in the UK and 74 concession sites. Cotton cost rises were partly offset by increasing the price of some clothing ranges. In a statement the company said input costs are expected to “ease in future years as cotton prices reduce”. 

It also paid additional distribution costs following technical issues associated with installing a warehouse management system. Although most of the technical problems with its UK distribution centre were resolved at the end of November, the group had problems replenishing stock in its UK retail outlets with incorrect stock requirements in most stores and incomplete size ranges.

The August appointment of the head of sourcing Shaun Packe, who previously led a purchasing team at Asda, has helped the group address its supply base requirements.

The company said it has increased its first tier supply base, with 53 vendors compared with 47 at the end of 2010.

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