On the retail side, revenue was up 26.4 per cent to £92.4m and profits rose 4 per cent to £7.8m, significantly less than the £10m forecast by analysts mainly because of higher warehousing costs, which increased by more than the growth in sales, and gross margin dilution from clearance activity. In turn this caused the unit's underlying operating margins to fall by a hefty 200 basis points to 7.7 per cent. The lacklustre retail performance was partly offset by a better showing from wholesale which boosted operating profits by 20 per cent to £15.1m on sales up 4.4 per cent to £65.8m. Gross margins here benefited from falling cotton prices and better supplier terms. But while wholesale revenues in Europe and the rest of the world posted double digit rises, the UK operation saw a 25 per cent decline.
Broker Peel Hunt expects full-year EPS of 45.7p, rising to 47.2p in 2014 (2012: 37.9p).
|ORD PRICE:||560p||MARKET VALUE:||£449m|
|TOUCH:||559-560p||12-MONTH HIGH:||742p||LOW: 264p|
|DIVIDEND YIELD:||nil||PE RATIO:||15|
|NET ASSET VALUE:||238p||NET CASH:||£16.5m|
|Half-year to 28 Oct||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
|*Includes intangible assets of £39.2m, or 49p per share|
Supergroup's new management team seems to have tackled past problems, but we still have reservations about the brand longevity and await more evidence of real improvement. Hold.
Last IC view: Hold, 388p, 13 July 2012