Fashion retailer SuperGroup (SGP) is in vogue with investors as a second quarter update prompts a 6p share price advance to £12.12. The £968 million cap's strong sales momentum, flagged recently by Shares, suggests the recent cycle of forecast upgrades has further to run.
You can read the finer details of the latest trading update here, although the key takeaways are total retail sales up 20% to £63.5 million and a 16.7% surge in wholesale revenues to £53.1 million for the quarter to 27 October. Designing and selling premium men's and women's clothing under the flagship Superdry brand, the company's jackets, hoods, shirts, bags and accessories are clearly flying off the shelves and today's numbers indicate the youth fashion brand has yet to run out of steam.
Quarterly like-for-like sales rose 7.8% despite tough comparable metrics and hot weather, which SuperGroup navigated through a healthy mix of product to meet warmer temperatures. Early interest in SuperGroup's Spring/Summer ranges is also thought to be strong, boding well for sales growth rates going forward.
A running Shares Play of the Week, SuperGroup is only at the foothills of its international expansion and has the balance sheet strength to buy in franchisees in order to accelerate its owned store presence in Europe. In today's statement, SuperGroup flags the recent acquisition of its German agency including seven stores for a reasonable £3.5 million.
Encouragingly, with the help of the roll out of local language sites, chief executive Julian Dunkerton says e-commerce sales from Europe and the rest of the world have overtaken those generated on home turf, 'reinforcing our view of the international appeal of the Superdry brand, an important step in delivering our international strategy.'
Analyst Kate Calvert at Investec Securities is a buyer and raises her price target from £13 to £15. SuperGroup trades on a prospective price to earnings ratio of 21.7 times for the year to April 2014. Calvert has no qualms about the valuation, writing: 'With 2011 operational issues a distant memory and the infrastructure investment plans on track, attention should focus on the multitude of growth opportunities. Its premium sector valuation is more than justified by its sustainable long term double digit growth prospects.'
Broker N+1 Singer has an £11.75 target price and sticks with its 'hold' rating for now 'given the risks surrounding the systems and infrastructure investment being made but the portents are certainly looking more encouraging as the business builds momentum'.
