Stock of the day 06/07/2015 – SuperGroup PLC

After circling year and a half lows at the start of January, SuperGroup has had a [enter super-pun here] 2015. The company releases its full year results on Thursday.

Following a 2014 full of profit-warnings, and a prolonged tumble from its near-high peak of £17.43 to its aforementioned low 18 month low of £7.51 near the start of January, SuperGroup has been trying, and largely succeeding, to recover its losses. It received its first significant boost of the year on January 14th, with the announcement of the company’s Christmas results. Like-for-like sales for the 11 weeks up to January 10th saw a 12.4% jump in sales, a vast improvement compared to the profit warnings SuperGroup was issuing as late as October, and pushed the stock up just shy of 11% to £8.98.


(Source: IT-Finance.com 06/07/2015)

The stock kept climbing following this news, crossing £10 in the process to reach a high of £10.60 by February 10th. However, this was as far as investors were willing to take SuperGroup at that point, and a couple of changes at the top took their toll on the stock’s price across February. The shock departure of chief operating officer Susanne Given sent the stock lower by around 5.5%, whilst the abrupt announcement that CFO Shaun Wills was leaving due to bankruptcy caused similar losses at the end of the month.

These losses continued throughout March, until a savvy PR move pulled the stock up by its stocks; the announcement that Idris Elba had signed as the new face of SuperDry caused a 6% surge and helped lift the company away from its first quarter wobble. A mixed April then saw SuperGroup ping pong between £9.50 and £10; however, another blockbuster 6 months (to April 25th) statement saw like-for-like sales jump by 11.3% for the period following a rare, but well-implemented, clearance sale. This took the stock 7.5% higher, a swell that was sustained across the month of May. A brief wobble at the start of June was swiftly overturned, and by the start of July SuperGroup was at £12.92, its highest point since its post-disastrous Easter profit-warning last in May ’14. It is currently trading at £12.76 (IT-Finance.com, 06/07/2015).

In terms of its upcoming full year results, following its stellar statement in May analysts are expecting a 12.5% increase in sales to £485 million, complimented by 5% growth in like-for-like sales, alongside a slim £0.5 million improvement in pre-tax profits to £62.5 million and earnings per share of 58.6p.

However, the most exciting news around the company is its international intentions. With 190 stores in Europe already, March saw SuperGroup re-secure its distribution rights for the USA, Mexico and Canada back in March after being displeased with the sluggish rollout implemented by previous distributor Sunrise Brands. On top of this comes news that the company is ready to tap the potential money pot that is China, with reports suggesting a deal is in the works to help SuperGroup enter the country. Its robust sales and ambitious intentional movements have left SuperGroup with a consensus rating of ‘buy’ and an average target price of £11.17.

Monday’s stock news:

First up is the FTSE’s selection of mining stocks. The continued volatility on the Chinese stock market has wreaked havoc on copper this Monday, sending the metal lower by around 3%. This had serious ramifications for companies like Rio Tinto (down 1.6%), Vedanta Resources (down nearly 8%) and KAZ Minerals (slipping by 3.5%), with a similar situation with Brent Crude and its related stocks.

Beyond the mining sector, the biggest losses this Monday lay at the feet of Rolls-Royce Holdings. The engineering company issued its latest profit warning this morning, something that contained an extra sting in its tale as Rolls-Royce announced it was also suspending its £1 billion share buyback scheme after having only returned half of that figure to investors. Its losses have calmed somewhat, down to 6.6% from the near 9% decline it saw immediately after the announcement, but still leaves the company at a 7 month low.

There was a nice package in the post for Royal Mail, which was a rare winner this morning as it jumped by 1.7% after Goldman Sachs raised its price target for the company to £6.10 (compared to a current price of £5.13) and reaffirmed its ‘buy’ rating on the stock. The main reason behind the note was Goldman’s view of the company’s cost control measuring, which analysts labelled a ‘positive surprise’.