Branded fashion retailer SuperGroup (SGP) is distinctly in vogue, the shares surging 12.7% higher to £14.20 as a year-end update highlights a significantly better-than-expected fourth quarter performance, confirming the company is very much in a growth phase.
Having generated 15.4% retail like-for-like sales growth for the 15 weeks ended 23 April, the Superdry brand owner confidently guides to an above-consensus annual pre-tax profit range of £72.5 million-to-£74 million.
Bucking the recent trend of downbeat updates from retail peers, among them Next (NXT) and specialist fit fashion purveyor N Brown (BWNG), SuperGroup defied a demanding 11.6% prior year growth comparative, not to mention tougher April apparel market conditions, to deliver stellar retail growth in Q4.
SuperGroup's quietest trading period, growth in the final quarter was supported by ongoing strength in the e-commerce channel and a good early reception to the British lifestyle brand's new sportswear and premium product ranges.
By developing the breadth and nature of the product range, the Superdry brand - 'designed for attitude not age' - is evidently appealing to a far broader, aspirational band of fashion shoppers across many age groups. SuperGroup is also expanding globally across Europe, North America and China, full-year wholesale revenues rising £13.7% to £173.4 million.
SuperGroup, now guiding full-year gross margin improvement towards the top end of a 40-60 basis point range, paid its first dividend in the final quarter. Flush with over £100 million net cash, the retailer clearly has the firepower to fund potential future special dividends too.
CEO Euan Sutherland says 'the group has traded robustly throughout the final quarter as we continue to deliver our strategy to create a global lifestyle brand. We have opened 24 net new stores across our targeted European markets and have a strong pipeline of new stores for the new financial year.'
The solitary disappointing bit of news is that influential Brand and Design Director James Holder, one of the founders, is resigning as a director and employee in order to split his time between personal interests and running a 'SuperDesign Lab' consultancy exclusively for SuperGroup.
Nevertheless, following the update, Cantor Fitzgerald Europe's Freddie George reiterates his 'buy' rating and £17 price target. The analyst upgrades his full-year pre-tax profit forecast from £73 million to £74 million, which takes his earnings per share estimate up from 66p to 66.9p.
'These figures confirm that the company is very much in a growth phase,' writes George. 'It still has a great opportunity to develop womenswear, which is looking more feminine, a compelling model, a more rounded assortment including Superdry Sport and Superdry Snow and, not to be under-estimated, a relatively well-established international infrastructure. European development and the restructuring of the US business continue to appear to be on track.'
