www.supergroup.co.uk

Retail sales signal a tough year ahead, BRC says
Tue 07 Feb 2012

http://www.sharecast.com/cgi-bin/sharecast/story.cgi?story_id=19861715

i keep saying but i'll say it again ...... uk high street fashion retail should be avoided

Numis, however, remain sell and are happy to tell everyone.

BE
Supergroup has seen sales slow dramatically over the last 3 weeks, with the Q3
outturn implying LFLs of -3% through January, even against weaker comps. We
lower our Apr-12 PBT forecast from £54.1m to £49.0m and, with the stock trading on 15x earnings, reiterate our SELL recommendation.
BE
Sales slow in January: Having posted a Christmas trading update which saw LFLs
improve over the first 9 weeks of Q3 to +5.8% (+9.3% through December), Supergroup
has seen sales slow dramatically over the last 3 weeks of January. LFLs ended Q3 at
+4.4%, implying a run-rate of -3% since the Christmas trading update. Moreover, the
statement notes that the slowdown was only for the last 3 weeks of January, implying a
considerably worse exit rate, likely at least -5%.
BE
Against weaker comps: Strikingly, this performance is set against weaker comps; last
year, the slowdown from the 9 week Christmas sales growth to the 13 week Q3 update
implied this 4 week stub was facing comps c.10% below those over Christmas.
BE
There were mitigating factors: While we had expected sales growth to resume its
declining trend through 2012, we had not expected such a rapid change in trajectory.
Admittedly there are mitigating factors; this is a fairly insignificant period in terms of
sales, competitor clearance activity ran longer than last year and the warmer weather
didn’t suit Superdry’s product range. However, it is also worth pointing out that with
internet still growing, and international online sales included in the LFL number, the UK
store-based LFLs must have moved comfortably into double-digit negative LFL territory.
BE
(Wrong weather klaxon!)
BE
Brand increasingly mass market: In our view, the solid performance over the
Christmas peak, followed by a deeper trough during non-peak periods reflects the
continued mass-marketisation of the brand; Superdry is increasingly appealing to
customers who only shop twice a year – at Christmas and for a summer outfit.
BE
Forecasts lowered, reiterate SELL: Although Wholesale sales resumed its growth
trend (+59.2%), management has guided PBT to be towards the lower end of
expectations; we cut our earnings forecast from £54m to £49m. The shares now trade
on 15x and we reiterate our Sell recommendation, believing the brand has passed its
peak and expecting the sales trend will continue a negative trajectory through 2012.
BE
And that’s enough, I think.

Further update for Broker NUMIS and target SP

SuperGroup FTSE 250 Consumer, Cyclical Sell 450 584 -22.9% Numis Securities

Target SP 450p 22.9% downside.

Retail to run out of steam


Retailers have been among the biggest gainers on the stock market so far this year, after Christmas turned out to be not quite as dreadful as many expected, and economic reports from major economies suggest pre-Christmas fears of a global economic meltdown were misplaced.

Shares in the FTSE All-Share General Retail Index have climbed 11 per cent in the year to date - exactly the retail bounce we wrote about at the start of December. But it has been more troubled retailers like JJB and Game Group that have been the major beneficiaries rather than the more robust operators we suggested may have been unfairly dragged down in the retail sell-off at the end of last year.

And, although the latest figures from the British Retail Consortium pointed to a slowdown in January, analysts remain largely sanguine. "[The like-for-like fall of 0.3 per cent] is perhaps a bit worse than expected, but we are not sure that justifies the weeping and wailing," said retail expert Nick Bubb.

Meanwhile, Markit's Household Finance Index for January suggested that consumers were slightly more upbeat about their finances than they have been for some time. "The year has started with a few chinks of light for household finances, helped in no small part by a drop in inflationary pressures on the high street and recent news of energy price reductions,", said the group's senior economist Tim Moore, as its statistics showed the deterioration in household finances had slowed to its lowest rate in 13 months.

Even so, there are clear signs that, along with the icy weather, the retail market is starting to freeze over once again. Fashion retailer SuperGroup warned that its profits this year would be at the lower end of expectations, after a substantial drop off in sales in the last three weeks of January, effectively a profit warning for a group that has serious growth expectations to live up to. That follows a warning from another clothing retailer, French Connection , last Friday, which brought to an abrupt end the 60 per cent gain its shares saw in the preceding month.

And, although lower inflation may be lightening consumer mood, it is not encouraging them to spend - nor, it seems, is the promotional activity that boosted Christmas trading and remains, according to Mastercard Spending Pulse, at elevated levels. Analyst Simon Irwin at broker Liberum believes consumers remain worried about job security and are choosing to pay off debt rather than spend. "We see little potential for consumption to increase meaningfully [in 2012]," he said, also noting that the sector remains dogged with structural issues.

So, while we still think it's worth hanging onto stronger retailers, and dipping into their shares on weakness with a long-term view, we'd be inclined to take advantage of gains elsewhere, since little has fundamentally changed.

SPG's progress over last few years has been consistent-continued growth and bottom line profit. Financials are sound and unlike many other retailers not over borrowed. Although 3 weeks lower than expected trading figures in Jan, trading patterns are changing in a number of sectors. Like Burberry, I would much rather be a "high end label" and one that is liked by the youngsters than a discount retailer. Retailers like French Connection and Supergroup which are still making profits and not increasing debt in the current retail environment arer the ones that I would rather hold when we come out of recession. Youngsters in the UK still spend on "labels" and this trend is expanding all over the world. Whilst Supergroup may well drop to 450p, I believe it will quickly head back up to £6+ the further into 2012 we go and the growth story continues. The share price fall has been on very low volumes. A few serious buyers at decent volumes would soon change the pattern. Hang on in.

22% of people out of work are Youngsters.AB FOODS FOR me now, PRIMARK. ABF1219p SGP519p

Fall today ?

SuperGroup Plc

Update

SuperGroup Plc ('SuperGroup' or 'the Group'), today provides an update on profit guidance for the financial year to 29 April 2012.

The Group expects profit before tax for the full year to be approximately £43m. The most material reasons for this are:

There have been arithmetic errors in our forecast of the Wholesale business amounting to some £2.5m.

Also, the Wholesale business is multi-dimensional, experiencing high growth levels and, given our rapid expansion and lack of history, it is difficult to predict accurately. There is a shortfall in the current year of some £2.0m due to the particular timing of pull-down of stock over the year end period by both franchise and wholesale customers. As this is largely a timing issue, the majority of these sales will fall into our FY13 result.

Retail sales are in line with expectations, however, the mix of sales through our various channels has impacted margins. Additionally, we took the decision to increase our operating costs in order to ensure that we had the correct product at the right time in each of our retail channels, and also, to accelerate investment in our management team. We anticipate the impact of these factors to be some £2.0m in total.

The above factors will have a minimal impact on our projections for FY13.

We intend to issue our IMS on 10 May 2012, as planned.

this company has badly blotted its copybook over the last year or so, and i would expect the market to react pretty brutally

Just the 35% down then.

CFO doesnt know the difference between a + and a - you just have to feel sorry for shareholders, how long has this arithmetic error been going on who are their auditors? sell.

Agree Halifax and other posts today.
+I've never understood the Market desire for this stock. PE is way too high, +no yield so it's all on Hope . .. and I suspect this second PW won't be the last . . . Management must use this turmoil to clear out any other bad news . . . and - pronto.

However, I understand most shares are held privately (Family?), so there will be long face around the dinner table tonight.

£16 this time last year, now £3.60-ish (briefly under £3 soon?)
Never held, yet it's not often a fully working business falls 40% in a day....Ouch!

Whilst the reported error is quite small as a % of Profits, it just adds to an overall feeling this is a wrong'un...IMHO. Time will tell.

Buy at 90p imo.

That's Black and White mentality. Negative means zero for some of these guys.

This is a disgrace.

..Questor share tip: Avoid SuperGroup despite share price slide

By Garry White | Telegraph – 38 minutes ago

Was it a bird? Was it a plane? No, it was SuperGroup (LSE: SGP.L - news) shares slumping by more than a third on Friday after it issued its third profit warning in seven months.

The company, which makes Superdry-branded clothes, had to confess it had got its sums wrong. There was an “arithmetic error” made in previous forecasts, which really does not inspire confidence.

As a result and because of timing issues with stock the company now sees full-year pre-tax profits of about £43m, down from previous expectations of £50m.

Supergroup has managed to prove the old stock market adage that profit warnings come in threes.

The first warning in October was caused by teething troubles in a new computer system. This “caused a significant, temporary reduction both in the amount of stock and range of sizes reaching its UK stores”. This, it said, would knock between £6m to £9m off its profit.

Then, in February, the company revealed there had been a slowdown in sales after Christmas. Profit guidance was cut again to the lower end of the £50m-£54m range.

ALL was looking well for SuperGroup until the latest disaster.

The company rectified its supply chain problems and beefed up its board.It poached John Lewis Partnership’s director of fashion and beauty four weeks ago,

Susanne Given, the ex-managing director of TK Maxx, also joined, as chief operating officer, so that chief executive Julian Dunkerton could focus on strategy.

Habitat’s Shaun Wills took over as chief financial officer from Chas Howes, who stepped down due to personal reasons. Things were looking up.

The market does not take mistakes such as “accounting errors” very lightly. It is going to take some time for the company’s credibility in the City to be rebuilt.

The fashion industry is difficult enough, being driven by many here-today-gone-tomorrow brands. Just last week Jaeger and Aquascutum hit the skids.

There is no doubt the shares now look cheap but things can be cheap for a reason.

Brave punters may wish to bet on a recovery but Questor would continue to avoid the shares, as has been the recommendation for some time.

one is tempted to think that there is still a fair bit of downside here for shorting, but it's a very illiquid stock and MMs will beat us to it before the opening bell

Unfortunately CMC don't cover it - I tried 1st thing on Friday.

IG certainly do