SuperGroup

BUY

13/07/2011 Ben Jaglom

SuperGroup (SGP), the company behind the 'Superdry' fashion brand, has unveiled a strong set of full-year results as its store roll-out programme gathers pace.

The fully listed company more than doubled pre-tax profits to £47.3m on sales up 71% to £237.9m for the year to 1 May 2011. Net cash increased by £4.2m to £32.2m. While a dividend had been expected, SuperGroup says the business 'is best served by retaining current cash reserves to support growth'.

The company opened 21 stand-alone new stores over the year, increasing its store count from 18 to 60. In addition, its 'franchise and licensed' stores reported 44 openings. Store openings included the Westfield shopping centre in West London, the Trafford Centre in Manchester and the Lakeside shopping centre in Essex. Furthermore, the group recently acquired the lease for a flagship store on Regent Street in Central London, likely to be a key location for the business and in an area with enormous footfall.

In response to market sceptics, chief executive officer and founder Julian Dunkerton declares that the 'Superdry brand is not dead', adding that the store on Regent Street is in what he called London's 'new Fifth Avenue' (a high-end shopping street in Manhattan, New York, home to brands such as Cartier). Concerning the future direction of the business, he notes that Superdry will be moving into areas including tailoring, part of the brand's aim of 'appealing to different demographics'.

Dunkerton remarks that he sees the company having an appeal 'similar to Ralph Lauren', with a wide variety of clothing offerings. Among international markets, China is described as a key target for the business's future ambitions, with Superdry garments already available in both Hong Kong and South Korea.

Analysts at Numis are forecasting adjusted pre-tax profits of £69.4m (EPS: 62.3p) on turnover of £332.7m for the year to May 2012.

Recommended by Growth Company Investor this May at £12.26 following a trading update, the shares have come under considerable pressure of late, though they gained 21% after the results. With plans to grow sales via further store openings, online channels and international expansion, we think that the shares have further to go. We therefore reiterate our buy rating.