Green­core aban­dons state­side am­bi­tions / Why Su­perdry’s feel­ing the heat / Why have leisure stocks un­der­per­formed?

Pre­mium ap­parel brand blames balmy weather for prof­its woe, but is the brand be­com­ing tired?

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Branded fash­ion re­tailer and whole­saler Su­perdry (SDRY) bombed on a full year profit warn­ing (15 Oct) blamed on un­sea­son­ably hot sum­mer and au­tumn weather, a hit from FX hedg­ing losses and the down­fall of part­ner House of Fraser.

Yet the Su­perdry branded t-shirts-to-jack­ets seller’s shares, now trad­ing at a lowly 784.5p, were weak ahead of the warn­ing, which may res­ur­rect con­cerns over the longevity of the brand and its faux-Ja­pa­nese styling.

Heav­ily de­pen­dent on cold weather cat­e­gories, usu­ally de­liv­er­ing 70-75% of its an­nual profit dur­ing the sec­ond half of the fi­nan­cial year, Su­perdry is the lat­est re­tailer to lament the seem­ingly un­end­ing warm weather.

The balmy con­di­tions that have con­tin­ued into Oc­to­ber, com­bined with weaker con­sumer con­fi­dence, have crimped the Chel­tenham­head­quar­tered pre­mium cloth­ing brand’s per­for­mance.

Con­cerns over de­clin­ing re­tail like-for-like sales are weigh­ing on the share price and Su­perdry con­cedes its first half owned store sales are ex­pected to show a low sin­gle digit de­cline amid sub­dued foot­fall and com­pet­i­tive in­dus­try con­di­tions.

Peel Hunt in­sists ‘over­all brand per­for­mance is not in ques­tion and Su­perdry has en­joyed stronger sales on the few weather ap­pro­pri­ate days in Septem­ber’, while stick­ing with its ‘buy’ rat­ing.

Nev­er­the­less, the bro­ker has down­graded its 2019 pre-tax profit es­ti­mate by a whop­ping £25m to £87m, con­ced­ing ‘in­vestors will need to see an ac­cel­er­a­tion in per­for­mance over the peak (pe­riod) to re-in­stil con­fi­dence in ex­e­cu­tion'.(JC)

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