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Superdry – argues “significant progress in the first half”, a further 6%+ share price fall suggests otherwise…

By Steve Moore | Thursday 8 November 2018


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Following a more than 20% share price fall to 800p on a trading update last month, shares in fashion company Superdry (SDRY) are currently more than 6% lower and below that price today on the back of a “Pre-Close Trading Statement”

The statement sees CEO Euan Sutherland argue “Superdry has made significant progress in the first half” (to 27th October 2018) and “we are well prepared for peak trading”. Hmmm - the statement reports 3.1% revenue growth to £414.6 million, including store sales down 2.3% to £177.4 million but average retail space UP 9.4% to 1.186m sq. ft.!

The statement follows a mid last month trading update having warned of “£8m in additional foreign exchange costs, split evenly over the financial year” and “unseasonably hot weather”. However, on an “around £10m” adverse trading profit impact it noted “the effect of the weather conditions experienced… combined with the well-publicised challenges facing some of Superdry's trading partners” - i.e. it was tough going anyway. The company now updates;

“While some of our key markets saw colder weather conditions last week, with the result that our sales performance in those markets was more typical for this time of year, we have not yet seen a sustained period of seasonally typical weather. As highlighted previously, the company's full year profits are heavily influenced by its performance in the second half, led by cold weather products with jackets and sweats accounting for 55 to 60% of autumn winter sales.”

Hmmm – “more typical” sales performance also suggests something of struggle even in the colder weather conditions and overall it sounds like a deferred further profit warning to me. I note Sutherland also adds “we are six months into a product diversification and innovation programme and, as we said in the summer, it will take up to 18 months for the benefits to come through”.

Is there really “significant progress in the first half”? Chris Bailey recently noted it possibly popcorn time here - concluding to get that and watch it all kick off. There are far easier retailers to buy shares in if you so wish. I concur and currently wouldn’t want to be owning shares here.


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