Problems with a warehouse system cost fashion retailer SuperGroup £8.8 million, the company revealed in its half year results.
The company, which owns the Superdry brand, said it had now resolved the problem which arose following an upgrade to the WMS at its Barnwood site in August. At the time it calculated that the cost would be between £6m and £9m.
The effect of the UK distribution issues is a combination of the one off reduction in sales (impacting both the first and second half), together with one-off set-up costs for the temporary warehouse capacity and the cost of additional transport to move stock between warehouses, it said.
“Management have decided to keep the temporary facilities to the end of the year to provide business continuity and support for the retail business which, together with the sales impact in November and early December means margins will be affected in the second half. However the impact will be mitigated by savings as the operations become more efficient.”[asset_ref id=”1376″]
The group has taken a series of measure to rectify the situation including:
* Commissioning additional temporary warehousing and fulfilment operations to create the necessary capacity
* Correcting the technical problems relating to the IT architecture
* Implementing additional training for operational and management staff
* Defining and implementing revised standard operating procedures
* Deploying additional interim managerial resource
* Conducting stock takes at the warehouses and throughout the entire UK store portfolio.
SuperGroup chief Julian Dunkerton said: “In the last six months we have seen a challenging trading environment and have had to overcome some significant distribution issues within our Retail Division.
“Our replenishment capability in the UK business in now restored and our international and eCommerce businesses continue to show good growth as a result of strong demand for the Superdry brand.”