SuperGroup issues profits warning after Superdry's tough January

The company behind the Superdry brand has issued a warning on profits and placed its store opening plans under review, four weeks after telling investors the business had enjoyed a "solid Christmas" with "an improving sales trend".

SuperGroup issued a fresh trading update on Wednesday saying its sales for the last three weeks of January were lower than anticipated, warning investors its full-year profits were likely to scrape in at the lower end of City expectations. Analysts had been expecting profits of between £50m and £54m after a previous profits warning in October.

Analysts said the two trading updates implied SuperGroup's comparable sales had been up 9.3% for December but had then fallen by about 3.5% during the first four weeks of January.

The news sent SuperGroup shares tumbling 18% to 573p. The company quickly became a stock market darling after floating in March 2010 at 500p, sending the share price to £18.98 within a year before a series of reverses.

The chief executive, Julian Dunkerton, played down the significance of the latest trading figures. He said: "Three weeks ago we were in the top six retailers across the high street in terms of Christmas sales. This [latest update] is only three weeks of trading. It is a small snapshot. A small percentage of our annual sales."

He said January's performance had been hit in part by heavy discounts from rivals. "A lot of our competitor brands had the heaviest sales I have ever seen." Some observers were surprised, however, that SuperGroup had been unable to identify this trend by the time of its trading update on 11 January. Indeed, SuperGroup claimed to have had a "very strong" first week of January.

The business has rapidly added new stores in recent years and now has 76 shops and 74 concessions in the UK as well as 116 overseas. Wayne Brown, an analyst at Collins Stewart, said: "We remain concerned that UK … sales growth remains below the rate of [store] expansion." The business remains on track to add 20 stores in its current financial year, but by mid-morning it confirmed it would now review future store opening plans.

The group had expected to open about 20 shops of between 3,000 sq ft and 5,000 sq ft, but Dunkerton suggested the future was likely to involve a smaller number of much larger stores. The business last year reputedly paid £12m for the lease to a large store on Regent Street, in London, which is to be its flagship outlet.

The company had been described by some as a UK version of Abercrombie & Fitch, though critics have suggested the business was heavily dependent on branded hoodies and risked falling foul of fast-changing fashions.

Dunkerton said: "Retail sales during the quarter have been mixed, with a challenging last three weeks of January."

Freddie George, an analyst at Seymour Pierce, cut his pre-tax profit forecast for SuperGroup by £2m to £52m. He insisted the stock, which divides opinion across the City, was undervalued.