12/12/2012 09:23 GMT

Superdry's Profits Increase Ahead Of The Crucial Christmas Season

Superdry's parent company has reported a 13% rise in first-half profits; a sharp turn around from its lack of fortune earlier in the year when it issued four profits warnings.

Online sales now make up 10.2% of total sales, and its international expansion has seen it open 37 franchise and licensed stores, including the first franchise store in India.

The return to positive territory marks a remarkable recovery for Supergroup, which had picked up a lot of bad press after a series of management errors including accounting mistakes, stock availability issues and the problems it faced implementing a new warehouse.

Following a profits warning in April, share prices in the brand fell by more than 40%. Its co-founder Theo Karpathios also unexpectedly quit in the summer, sparking another share price drop. But a new financial director was appointed in May, and since then the group has worked hard to turn itself around.

Julian Dunkerton, chief executive of SuperGroup, said the positive results were a consequence of ongoing investment and the work that's gone into improving the brand presence.

He also touched on the much reported significant changes to Supergroup's management structure, saying: "Good progress is being made but the full infrastructure upgrades, and the associated benefits, will take a number of years to deliver.

"The economic outlook remains uncertain but I am confident in our strategy and our ability to maximise the opportunities we have in the UK and internationally and deliver our full year profit targets."

Sales at UK stores open over a year were up 3.9%, while group wholesale sales increased 7.9% on a constant currency basis.

Business analyst for Company Watch Nick Hood told Huff Post UK Supergroup was making good progress on rebuilding its credibility.

"Trading has been better in the latest six weeks, although the water has been muddied a little by the usual confusion between what management declare as underlying profits, which were an improvement on last year. The current blast of arctic weather should propel the retailer into a successful Christmas outcome.

“The overall financial position at SuperGroup is very strong and bodes well for the future. We calculate health scores based on published accounts, and here the rating is a near perfect rating of 98 out of a possible 100, reflecting its substantial cash pile, lack of debt and a robust working capital profile."

But Mintel's retail director Richard Perks warned SuperGroup wasn't out of the woods just yet.

"Sales look impressive, but the profits performance is odd. The reasons for the exceptional costs sound like a continuation of the problems which came from a basic lack of control. There's (also) a big increase in gross margins at a time when the market is far from easy.

"It always looks so good on the high street, but it seems to be falling down on basic controls and that is very serious when you're trying to expand as fast as this. The sales gain is great - but isn't it just getting a bit too ubiquitous given the price points it charges?"