It would be an understatement to describe Superdry shares 2018 as a nightmare. The year was one long bleed-out. The stock tumbled from an all-time high of nearly £21 in January to eventually end 2018 at just £4.62, making the worst performer on the FTSE 350.
2019 has so far seen the mildest of rebounds, investors clearly unwilling to take a risk on the stock before having the chance to assess its latest update. Superdry shares now sit at a current trading price of £5.21.
In a year of many profit warnings, the most recent came on December 12th as the retailer revealed its half year results. Though global brand revenue rose 6.4% to £831.8 million, with a 3.1% increase in group revenue to £414.6 million, the firm’s underlying pre-tax profit collapsed by 49% to £12.9 million.
And the bad news didn’t end there. ‘Unseasonably warm weather’ – a huge issue given Superdry’s reliance on cold weather related products – continued through November and into December; combine that with a ‘discount-driven consumer economy’ and it suffered an adverse profit impact of £11 million in the former month and a potentially similar hit in the latter.
This meant it reduced its full year underlying profit forecasts to £55 million to £70 million, way off the previous year’s £97 million. Updating on its ‘comprehensive’ 18-month transformation programme CEO Euan Sutherland said it would ‘address the current over-reliance on jackets and sweats’, while it would be launching into new areas, including a Kidswear range.
Investors are going to be keen to hear what the December damage actually was on Thursday, as well as whether trading has picked up since temperatures have plummeted. Beyond just that Q3 statement, there’s also the lurking issue of founder Julian Dunkerton, who is angling to take back control of the company and has claimed he will call a shareholder meeting in the next few weeks.
Superdry shares have a consensus rating of ‘Hold’ alongside an average target price of £10.24.
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