Supergroup droops again

Posted by Neil Hume on Jun 20 09:00.

Oh dear.

Supergroup’s big investor and analyst day in Cheltenham has not got off to the best start.

Shares in the owner of the SuperDry clothing label have fallen sharply as the market has overlooked news of a recent improvement in recent sales and decided to focus on the slow progress of the retailer’s ambitious store opening programme. (It wants 150 stores up and down the country).

First thing on Monday morning, Supergroup told the market six to 10 new stores will open in the first half of its fiscal year.

From the company’s statement:

SuperGroup operates 61 standalone stores in the UK and 70 concessions and has a stated roll out programme of opening 20 owned stores per year. We remain committed to this plan in 2011/12.

Last year the Company opened 21 new stores, including three resites. We anticipate opening between 6-10 stores in the first half of our financial year, with three new stores on schedule to open in our first quarter. A significant proportion of the remaining balance of new stores will open before the important Christmas season. There will always be a natural element of phasing to our store opening programme, a variability in lead times, and also differences in expected sales contribution, from site to site and we will continue to update on our store openings on a quarterly basis. The potential in the UK remains and SuperGroup continues to believe that there is capacity for up to 150 stores in the UK market.

But full-year consensus forecasts are based on the development of 20-25 new stores a year, which means Supergroup has an awful lot to do in the next six months.

A point not lost on Wayne Brown, retail analyst at Collins Stewart:

The company has also confirmed that the opening programme for FY 2012E will be H2 weighted with only 6-10 stores due to open in H1 (3 in Q1) with a “significant number of new stores to open before Christmas”.

One of our chief concerns is that consensus forecasts are predicated on a faultless execution of an aggressive development programme of 20-25 new stores p.a. This statement provides confidence that all is-on track though H2 weighted, in-line with our below consensus expectations. With increased variability in lead times, and differences in expected sales contributions from site to site, the shares are likely to be volatile between quarterly updates.

Indeed they will, especially in September when the lock-ups over 65 per cent of the company come off.

That said, they could prove volatile today especially when investors have seen the whites of management’s eyes at Unit 92, The Runnings, Cheltenham.

The fun begins at midday with an introduction from Supergroup chairman Peter Bamford.

Related links:
Supergroup goes on sale – FT Alphaville
Superdroop – FT Alphaville
Supertramp – FT Alphaville
Supertrap – FT Alphaville

This entry was posted by Neil Hume on Monday, June 20th, 2011 at 9:00 and is filed under Capital markets, People. Tagged with , , .

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