Fashion retailer SuperGroup (SGP) stumbles as its fourth quarter trading update contains a mild profits warning. Yet supporters might consider the Superdry brand-owner's 193p (14.3%) slump to £11.55 overdone given today's downgrade is modest and brand momentum is gathering overseas.
The running Shares Play of the Week, whose previous with earnings alerts looked to be behind it, now expects profits for the year to 26 April will come in 'towards the lower end' of the £62.9 million consensus.
This follows disappointing Q4 retail like-for-like sales, down 3.1% versus Investec Securities' 5% growth forecast. The miss reflects weaker footfall due to this year's late Easter, as well as the impact of warmer weather, which drove a sales mix shift away from outerwear commanding higher average prices and towards lower value summer products. However, total sales in the retail division still grew 13.3% to £54.6 million as the £1.12 billion cap's international expansion continued apace and for the full-year, same-store revenues were in positive territory to the tune of 3.2%.
Timing issues account for the slowdown in wholesale, where an 11.2% sales advance to £43.2 million compares unfavourably to third quarter growth of 42% when early shipments pulled forward sales. Again, some context is needed, as wholesale revenues still skipped 23.5% higher to £145.6 million for the year overall as the Superdry brand's reach was further extended everywhere from France and India to Italy and Indonesia.
Bulls will also point out that for the financial year as a whole, total group sales still grew nigh-on 20% to £431 million and SuperGroup has done most of the heavy lifting in terms of infrastructure investment. It launched a new merchandising system in March and has successfully moved to a new retail warehouse to support its growth ambitions.
CEO Julian Dunkerton's outlook statement also strikes an upbeat note. He highlights a 'solid performance over the past year', an encouraging reaction to SuperGroup's forthcoming Autumn/Winter collections and also flags a strong pipeline of new stores, particularly in Europe where the brand resonates everywhere from Germany and France to Holland.
Investec retail sage Kate Calvert nudges down her 2014 taxable profits estimate 2% to £61.8 million on today's setback. However the analyst, with a 'buy' rating and £16 price target, sticks with her £72.2 million April 2015 estimate, 'viewing the slower Q4 growth as a timing issue rather than fundamental brand concerns'.