SuperGroup steady ahead of first-half figures

SuperGroup will report its first-half figures on Thursday 11 December. The share price has rebounded since the profit warning in autumn. 

Superdry hoodies
Source: Bloomberg

SuperGroup’s shares suffered a blow in October when the retailer warned on full-year profits. The company, which owns the Superdry brand, stated that annual profits could fall as much as 17% due to the warm weather. This year was the hottest Halloween on record and the unusually long summer meant that sales of t-shirts were relatively high, however sales of items that have a higher profit margin like jackets were lower.

SuperGroup was not the only clothing retailer to blame the warm weather for lower profits. Next lowered its full-year outlook only days before SuperGroup warned on its. I wouldn’t be put off by the soft autumn sales — in July the firm revealed a 19% rise in full-year profits.

Euan Sutherland took over from founder Julian Dunkerton as CEO in October. Mr Sutherland has nearly 20 years’ experience in the retail industry and has been given the task of expanding the overseas business. In the previous financial year the company expanded its floor space in continental Europe by 18%, and Mr Dunkerton will have to build on this. Under Mr Dunkerton’s leadership the firm had a series of profit warnings between 2011 and 2012, and since he owns close to one third of the company it is clear he views Mr Sutherland as a safe pair of hands.

According to the European division of Visa, UK retail spending rose by 1.6% in November on an annual basis. Black Friday is taking on this side of the Atlantic but Mr Sutherland insists that SuperGroup will not be slashing its prices to entice shoppers. He believes in upholding the image of the brand in the long-term.

SuperGroup will report its full-year numbers in July 2015, and traders are expecting revenue of £480 million and adjusted net income of £45 million. These forecasts represent an 11% increase in revenue and a 3.6% decrease in adjusted net income.

The fashion house will release its first-half numbers on Thursday 11 December, and the consensus is for revenue of £209 million and operating profits of £15.8 million respectively.

Equity analysts are bullish on the company. Out of the 12 ratings, seven are buys, two are holds and three are sells. The average target price is £10.45 which is 17% above the current share price. Analysts are slightly less bullish on Next, on which there are ten buys recommendations, 14 hold ratings and four sell recommendations. The average target price is 0.5% below the current price.

The stock has recouped the losses from the profit warning in October. If the share price drifts lower it is likely to find support at £8 and a good set of first-half figures could push the stock to £9. 

SuperGroup chart

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