Bloomberg News

SuperGroup Falls on Forecast of ‘Lower End’ Profit: London Mover

February 14, 2012

Feb. 8 (Bloomberg) -- SuperGroup Plc, the owner of the Superdry clothing chain, fell the most in four months after predicting that annual pretax profit will be at the “lower end” of analyst estimates because of a tough start to 2012.

The U.K. retailer declined as much as 18 percent, the most since Oct. 5, after saying that revenue growth slowed in January as shoppers held back on spending after Christmas.

Sales suffered in the last three weeks of January as Britons were lured by heavy discounting at competitors, Chief Executive Officer Julian Dunkerton said in an interview today. The retailer, which doesn’t offer in-store price cuts, expects that trading will “normalize” in the fiscal fourth quarter as spring clothing reaches stores, he said.

“Although January is a small proportion of full-year sales, we expect caution to prevail and for market forecasts to be downgraded by around 5 percent,” said Mark Photiades, an analyst at Singer Capital who recommends buying the shares.

The slowdown marks a backward step in the expansion of a company that has increased sales almost 10-fold in four years and plans to open 20 stores in the U.K. this fiscal year. Retailers had their second-worst January on record last month, with same-store sales falling 0.3 percent as consumers pared spending, according to the British Retail Consortium.

Pretax profit will be at the lower end of a range of 50 million pounds ($79.6 million) to 54.1 million pounds predicted by analysts, the Cheltenham, England-based retailer said today in a statement. The average estimate for 2012 pretax profit in a Bloomberg survey of nine analysts is 52.9 million pounds.

‘Not Very Exciting’

Sales at stores open at least a year rose 4.4 percent in the 13 weeks ended Jan. 29 from a year earlier, compared with growth of 9.3 percent in December.

“If you’ve got three weeks of not very exciting sales, it’s better to be cautious,” Dunkerton said in a phone interview. “But I don’t see a reason for that to continue as our competitors come out of discounting.”

The executive said the retailer is reviewing planned store openings, with a preference for adding fewer, larger stores in key locations.

“We will continue opening but we will be more selective because it’s quite obvious the high street is changing, so what you’ll probably see is a focus on larger, premium stores,” Dunkerton said. “We could open 150 but the reality is we will probably open less but larger.”

Share Performance

The stock was down 17 percent at 584 pence at 9:32 a.m., extending the 12-month decline to 67 percent and giving SuperGroup a market value of 469 million pounds.

In December, SuperGroup reported a 3.7 percent drop in first-half earnings caused by warehouse capacity shortages that affected product availability. Problems experienced at the Barnwood distribution center in western England have been resolved, the company said at the time.

“Our focus in the coming year will be on rolling out our new ranges in the U.K. and internationally, and making improvements to the operational side of our business,” Dunkerton said today in the statement.

--Editors: David Risser, Thomas Mulier

To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net.

To contact the editor responsible for this story: Sara Marley at smarley1@bloomberg.net


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