SuperGroup recovers and surpasses flotation price

According to the Interim Management Statement, which covers the 13 week period to 29 July 2012, SuperGroup's total sales for the quarter have increased by 10 percent to 59.7million pounds. The stock is now above its flotation price of 500 pennies.



"TheSuperGroup recovers and surpasses flotation price Retail division has produced a sound performance during the quarter against challenging comparatives and reflects the impact of improved retail practices. Whilst Wholesale revenues appear more challenging in the quarter, we are encouraged by the level of the order book for the full Autumn/Winter season. Trading conditions remain volatile and unpredictable, but SuperGroup has produced a pleasing performance and while we recognise that it is early in the year we are on-course to meet our financial objectives," summarized Julian Dunkerton, Chief Executive Officer.

Total UK sales in the 13-week period were 40.2 million pounds, which means an increase of 19.7 percent on the comparable period last year, and like-for-like2 sales were up 1.7 percent. Wholesale sales for the 13-week period went up to 19.6 million pounds, down 5.6 per cent year-on-year, but the group said that this reflects differences in timing of stock delivery to UK and international partners compared to last year.

The stock closed Tuesday with a gain of 5 percent. This values the company at about 450 million pounds, and it trades at 12 times estimated profits, stressed ‘The Motley Fool’.

‘The Scotman’ quoted Matthew McEachran, retail sector analyst at Singer Capital, to have said: “The shares have performed well over the summer after the disappointment of the past 12-18 months and the new management team appears to be instilling improved practices.”

In the last few months new management has proved to be crucial for the company that has seen its shares have more than doubled from a low of around 250 pennies. Now, the stock is above their flotation price (5.67 pounds over initial five pounds).

Analysts at investment bank Merrill Lynch said: “Despite a disappointing track record on execution, we believe SuperGroup remains an attractive story for two main reasons: firstly, Superdry is a differentiated brand benefiting from rising brand awareness, and secondly SuperGroup offers a compelling space growth story, both in the UK and internationally, complemented by a successful online strategy.”

The stock also had its buy rating reissued by analysts at Canaccord Genuity. They currently have a 13.71 dollars price target on SuperGroup’s shares.
 

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