Can I submit an extended version of a conference paper or a journal, if a better algorithm exists? We published a paper in a theoretical CS conference last year, and were hoping to submit it to a journal when we found out that our result was improved in a followup work.

While it's clear that there are no ethical issues with submitting the extended manuscript to a journal, its results are inferior to the recent followup paper.


Would we get the same consideration as if the new paper does not exist (i.e., comparing the results to what was known before our original publication)?
Assuming that the answer is no, is there even a point in submitting it?


To be clear, we do mean to cite the newer result; my question is about how likely our paper is to get accepted under the circumstances.
This is a perfectly normal timeline in theoretical computer science:


Result A is published in a conference.
Building on result A, someone else publishes followup work B in other conferences.
A polished version of result A is submitted to a journal and published there. The journal paper refers to result B and also discusses how follow-up work B has already improved on the results of the paper.


Here the fact that there is already follow-up work is a good sign that will help you to convince the reviewers that this is an important result that deserves to be published in a good journal.