Can a freezing cold Superdry warm up with next week’s half year results?
2018 has been a truly terrible year for the clothing company. Starting at £19.81, it had quickly climbed to an all-time high of £20.99 within the first week of January. Yet that is a distant, distant memory at this point.
Since hitting that peak the stock has been in a rather serious downward spiral, eventually striking a 5 year-plus nadir of £7.08 at the end of October. Superdry PLC now sits at a current trading price of £7.60.
It’s most recent dive came on 15th October, with the stock tumbling 22% in a single session after Superdry issued a profit warning in an unscheduled update. ‘Unseasonably hot weather’ in its key markets in September and the first half of October resulted in a significant drop in demand for its autumn/winter products and, therefore, a £10 million hit to its full year profits. As a silver lining the company did say it was 5 months in to an 18 month product diversification drive that would ease its reliance on heavier weight goods like sweats and jackets.
But that wasn’t all. No, Superdry also announced that its historic foreign exchange hedging mechanisms had ‘not provided the same degree of protection as expected’, leading to an additional £8 million in FX costs, split evenly across the year.
In early November it then provided some numbers to go alongside that investor-upsetting October statement. First half Global Brand revenue (excluding China) rose 6.4% to £831.8 million, with Group revenue up 3.1% to £414.6 million. The performance in Q1 and Q2 was night and day; the former saw a 0.4% rise in Global Brand revenue, while the latter saw a 10.1% increase.
It did, however, reiterate that its full year profits are ‘heavily influenced by its performance in the second half’, given that at the time of the release it had not seen a sustained period of seasonally typical weather.
Considering this, the reception to Wednesday 12th December’s interim results may be more dependent on the state of current trading than its likely poor half year profit performance.
Superdry PLC (LON:SDRY) has a consensus rating of ‘Buy’ alongside an average target price of £14.00
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