Following its IPO SuperGroup has outperformed the market, but recently some not-so-impressive figures suggest the bubble might have burst. Is this the case or is the City overreacting?
Why are we asking this now?
It’s been the uber-cool brand of the last few years but last week owner SuperGroup’s shares went rapidly out of fashion after slower than expected growth unnerved the City. The business lost more than a fifth of its value in a day.
An FCUK moment then?
Some fear the brand might have lost its cachet. In the same way that it’s said Londoners are never more than 20 yards away from a rat, the same might be observed across the country of Superdry’s togs. When the target customers’ dads are wearing the brand, some worry about its longevity.
Hang on a moment, isn’t the reaction out of proportion? SuperGroup’s retail sales were still up 39% last quarter
Yes, and wholesale was up even more – 89%. Both numbers would indicate that there’s plenty of appetite at home and overseas for the brand. SuperGroup founder Julian Dunkerton remained bullish and described the last year as “excellent both financially and in terms of our development”.
What did he put the slowing growth down to?
He acknowledged SuperGroup had been too slow to get the full range of new season’s stock into its stores and lost out as a result when the sunny weather and bank holidays drew out shoppers. SuperGroup also only opened one shop in the quarter compared with six in the comparable period last year.
Was the City convinced by those reasons?
Opinion was mixed. Several brokers, while expressing disappointment, still bought in to the SuperGroup growth story. Oriel’s Jonathan Pritchard was concerned by “the inability of the supply chain to switch the stores over to spring/summer quickly enough” but said: “Commentators will doubtless ignore this explanation and take delight in calling the turn in Superdry’s image. We think it’s a management error but the brand remains in very
“Missed sales won’t come back and management will have to accept the market’s rap on the knuckles for this. But there’s no lasting damage done, with lessons learned.”
And Numis’s Andy Wade, who calculated that SuperGroup’s store like-for-likes may have suffered a double-digit fall in the quarter, took a similar view.
He said: “We will need reassurance from future updates that this was a seasonal mishap rather than a far more concerning slowdown in brand momentum.”