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Winter trading suggests better year ahead for Superdry

The group returned to profit, despite revenues falling, with post-period results displaying tangible progress
January 20, 2022
  • Profit posted after last year's lockdown-hit results
  • Gross margin growth cancelled out revenue fall

Superdry (SDRY) returned to statutory profit, helped by a £6m gain on foreign exchange forwards. But while the group is back in the black this can’t obscure the fact that overall revenue has fallen compared with both the pre-Covid period and year on year.  

Store revenues jumped by a fifth to £103m as the clothing group took advantage of a less restricted retail trading environment. Ecommerce income, meanwhile, dropped off a cliff – sales were down by 30 per cent to £62m. Management pinned this on last year’s heightened level of promotions, with online sales still up by 8 per cent on a two-year basis.

With revenues down, gross margin progress came to the rescue. Margins were up by 3.5 per cent, spurred on by a 12 per cent increase in the full-price sales mix.

Winter trading results – disclosed up to 8 January – were a standout and suggest better things are to come for Superdry. Both retail and wholesale sales spiked against last year, with jacket sales up by 40 per cent and positive steps made with womenswear and products aimed at younger customers. Store and ecommerce gross margin gained over 4 and 5 per cent, respectively, against two years ago, in this period.

Consensus forecasts have the shares trading on a 12-month forward price/earnings ratio of 11 times, below Superdry’s five-year average. Broker Numis expects profit before tax of £30m and EPS of 29p for fiscal year 2023, rising to £48m and 46p for 2024.

Winter trading was impressive, consumer footfall is improving, and margins are growing. Singer Capital Markets said that “a break-out in 2022 looks increasingly likely”. We think there is enough to support a recommendation upgrade. Hold.  

Last IC view: Sell, 255p, 9 Dec 2020

SUPERDRY (SDRY)   
ORD PRICE:255pMARKET VALUE:£209m
TOUCH:254-257p12-MONTH HIGH:493pLOW: 194p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:112p*NET DEBT:260%
Half-year to 23 OctTurnover (£m)Pre-tax (£m)Earnings per share (p)Dividend per share (p)
2020283-18.9-18.8nil
20212774.003.00nil
% change-2---
Ex-div:-   
Payment:-   
*Includes intangible assets of £41.8m, or 51p a share