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SuperGroup confident in the face of Brexit

The clothing chain has had a great year, and it's staying positive in light of the recent referendum decision
July 14, 2016

SuperGroup (SGP) chief executive Euan Sutherland says there's been "no adverse effects from the recent referendum" despite other retailers bemoaning the state of consumer spending post-vote. He's also confident in the business's ability to navigate any currency issues this year in light of sterling's recent weakening against the dollar. According to Mr Sutherland's numbers, the group generates 55 per cent of earnings outside of the UK and sources half of its product in US dollars, with the remainder in sterling. SuperGroup is sufficiently hedged against currency swings for the next 18 months, he added.

IC TIP: Buy at 1,538p

The last financial year has been a good one for the group. Like-for-like retail sales grew 11 per cent, with underlying gross margins up 60 basis points to 61.5 per cent. Operating margins were also higher if you exclude initial losses in SuperGroup's "development" markets, namely the US and China. Cash generation also rose dramatically - to £91.6m from £50.8m in the previous comparable period - which prompted a special dividend worth 20p a share.

Analysts at Peel Hunt expect pre-tax profit of £88m for the year ending April 2017 (from £73.5m in FY2016), giving EPS of 82.3p.

 

SUPERGROUP (SGP)
ORD PRICE:1,538pMARKET VALUE:£1.25bn
TOUCH:1,534-1,541p12-MONTH HIGH:1,733pLOW: 1,100p
DIVIDEND YIELD:1.5%*PE RATIO:30
NET ASSET VALUE:413pNET CASH:£101m

Year to 30 AprTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201231451.445.0nil
201336051.844.7nil
201443145.234.0nil
201548759.556.1nil
2016**59855.450.723.2
% change+23-7-10-

Ex-div: 21 Jul

Payment: 23 Sep

*Excludes 2016 special dividend worth 20p a share

**53-week period