Superdry defends longevity

Superdry parent Supergroup have hit back at critics who said the brand was a one hit wonder. The company, which started modestly as Cult Clothing in 1985 in Cheltenham led to the creation of more stores in the UK, many of them in university

towns.

In 2003, Julian joined forces with designer James Holder who had previously founded the Bench brand, to develop and create a new in-house brand and Superdry was born.

Julian Dunkerton, the founder and chief executive was quoted in the Guardian: "Some people have likened us to the FCUK scenario, which was very much one logo-led. Now the market is understanding us better; we are not like that. We have a huge range of product, our [customer] demographic is huge."

He was speaking as the company's breakneck sales growth, which had shown signs of slowing in recent months, once again powered ahead. Supergroup reported retail sales up 48% for the first 10 weeks of the financial year.

Shares in the company slumped in May after sales growth for the final quarter of the year fell to 39%, down from 92% for the previous three months. Last month the retailer said sales growth rate had remained at 39% since the year-end, though there were signs it was accelerating again. Wednesday's update sparked a sharp recovery in SuperGroup's shares, which leapt 21% to £10.62. They are still trading well below the high of nearly £19 but remain more than double last year's float price of 500p.

SuperGroup added 18 UK stores during the year, taking the total to 60 outlets. A further 44 franchised stores were opened abroad, taking the total to 80. The firm does not disclose same-store sales figures, which many other retailers use to give investors a sense of underlying performance.

Dunkerton described the sales growth as "exceptional" compared with peers and insisted he was "very excited" about prospects for the current year: "You can see how we have put any question marks to bed." Full-year figures from SuperGroup – which showed pre-tax profit of £50.2m, in line with City forecasts – provoked a flurry of "buy" recommendations from analyst, though some remained cautious.

"SuperGroup remains a contentious stock," said Andrew Wade of Numis Securities. "We remain concerned that we can find no precedent for a UK brand successfully combining longevity with selling overtly branded fashion to the mass market." Latest figures from the research firm Data Explorers suggest short-selling interest in SuperGroup shares rose from 1.5% to 3.5% in mid-June and has stayed at that level.

The firm's roaring sales growth and furious expansion programme is in marked contrast to elsewhere on the high street. Topps Tiles, which has 313 UK stores, told investors on Wednesday that recent trading had been "subdued", with same-store sales down 1.9%.

Image: Superdry
Source: Guardian©