0808 Thursday 13 December 2018
For the second time in as many months, Superdry has blamed the weather for a drop in sales. In their earnings report in October, the UK retailers cited the hot summer has hit the demand for their clothing range and predicted a £10m deficit from their bottom line. When that news broke, stock price dropped by 20% sending it to its lowest level since Jan 2015. The same sentiment was continued yesterday with a similar warning and a similar result.
Yesterday’s profit warning came off the back of “unseasonably warm weather” in November through December, causing the UK public to turn their back on sales of hoodies and jackets. The company this time suggested that profits could be hit by as much as £22m with their full-year estimates between £55m to £70m compared to analysts’ forecasts of £87m. Within their statement yesterday, the firm also claimed that the "wider political and economic uncertainty" that is being caused by Brexit has taken its toll on consumer confidence.
As the news of the latest profit warning broke, the market reacted instantly dropping 20% as trading started and then down a further 15% by 0830. SDRY.L closed the day down 38% at 355.20 taking it to its lowest level since mid-2012. In the year-to-date, Superdry is now down a jaw dropping 82%.
The drop in share value for Superdry could be of interest to investors looking to pick up cheaper UK equities of the back of recent performance. As a brand, Superdry has suffered from circumstances outside of their control, namely the weather and Brexit, and there is no underlying reason that the firm couldn’t rebound. Indeed brokers seem to hold a similar view with target prices well above its current level. Liberum hold a 475.00 price, Peel Hunt has it at 550.00 and RBC Capital has not altered their target of 900.00.
To get further details on Superdry and the UK retail sector, call one of our brokers on 0121 454 0770 or enter your details below.
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