SuperGroup to Exit Asos Site, Dealing Blow to Web Retailer
SuperGroup Plc (SGP) will remove its Superdry clothing brand from the Asos Plc (ASC) Web site, dealing a blow to the U.K.’s second-largest online clothing retailer, which relies on outside brands for almost half its sales.
SuperGroup, whose hoodies and leather jackets are worn by celebrities such as David Beckham and Zac Efron, has put its wholesale relationship with Asos “on hold in the short- to medium-term,” as it expands its own international e-commerce offering, Chief Operating Officer Susanne Given told Bloomberg News. Asos Chief Executive Nick Robertson declined to comment.
Superdry is the first major brand to exit Asos’s fast- fashion multibrand Web site as SuperGroup avoids cannibalizing its own Web sales and takes control of international pricing. Asos currently offers 171 Superdry menswear items on its U.K. site, including a $107.71 windcheater jacket and $38.11 T-shirt.
“It’s not a very positive development” for Asos, said Chris Chaviaras, an analyst at Barclays Capital in London with a neutral recommendation on the stock. “Superdry is an important brand, especially for the targeted customer for Asos, but we must bear in mind that no brand contributes more than 1 percent of Asos’s sales.”
Asos fell as much as 1.6 percent in London trading, and was down 1.3 percent at 1,570 pence as of 3:58 p.m., erasing a gain of as much as 2.3 percent. SuperGroup shares rose as much as 6.6 percent and were up 2 percent at 270.7 pence at 3:58 p.m.
SuperGroup is reducing its wholesale channels in the U.K. as it expands its retail operations and invests in e-commerce.
“This, combined with our planned growth of international e-commerce and the complexities around international pricing, which directly affects our international SuperGroup partners, has resulted in us putting our wholesale relationship with Asos on hold in the short-to medium-term,” Given said.
Asos offers about 850 brands on its site from $280 Burberry Group Plc (BRBY) sunglasses to $41 River Island dresses. About 55 percent of revenue comes from its own-label ranges. Robertson said growth in sales of Asos branded products was “a bit of a short-term trend” as shoppers in new international markets tend to move onto other labels after initially buying Asos’s items.
“There’s going to be a natural churn, some we will want to downscale,” the CEO said last month. Still, the only big brand that had left and since returned was All Saints, a closely-held U.K.-based seller of $395 men’s leather jackets, he said.
SuperGroup shares have tumbled 47 percent this year, after the retailer cut its profit guidance for the third time in about six months. In April, CEO Julian Dunkerton cited a fall in wholesale demand, increased operating costs and an “arithmetic error” for a profit shortfall.
The retailer has posted double-digit growth in retail sales since listing on the stock exchange more than two years ago. The owner of the Cult brand sells to 91 countries via its websites, with e-commerce accounting for 8 percent of revenue in the fiscal first half, almost double the year earlier period.
SuperGroup also sells $30 Superdry-logo t-shirts at 79 U.K. stores and 74 concession spaces inside department stores such as House of Fraser. Superdry has a policy of never offering discounts in its standalone stores. Shoppers must seek out its nine outlets and EBay Inc. for discounts.
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