I last wrote about clothing name Superdry (SDRY) back in September HERE, concluding that returned CEO and historic founder Julian Dunkerton was someone to back. Back then the shares were about 132p and despite inevitable challenges in its big plans, even with a current share price fall you still have a share ahead of 210p. So still some value company or is a £173 million market cap now too much?...
Latest numbers include formal half-year results to the end of October (a bit of a while ago) and a sales update including Christmas. Headline numbers were far from hot with getting on for 30% sales falls influenced by 70% of stores being closed and this not being able to be fully offset by rising online sales. And some of you will remember that the Superdry company of a year or two ago was shockingly focused on t-shirts or coats that you can easily find equivalent options for at almost any other clothing company you could mention. So challenges are still out there and the six months to October saw a £10 million loss. Factor in Covid challenges and another £10 million loss is quite likely, even if it has not introduced a formal full-year estimate.
So why am I still impressed by some angles with this one? The first reason is that the company has net cash on the balance sheet (currently just over £50 million) and about £500 million of sales. Now trading at x0.3 sales is not cheap if you are not going to become a profitable company sooner rather than later but this is where the Julian Dunkerton love angle kicks in. And the reality is the shift to different brands that even I could admit the average 18-30 year old may find much more interest in. Talk about Superdry X offering unisex products and vegan trainers may seem weird to you and me but we have to accept such changes are going on. On the sports product side, not only are sales starting to improve but it has even got people like football legend Neymar da Silva Santos Júnior sending photos of him wearing the products. This is so obviously not for me to wear but this is where the young are going.
And this is the key story with this one. Ultimately, it is all about that fashion article that I think Julian Dunkerton still offers. In the year to April 2022, the physical shops should all be open and there should also be continued double-digit growth in the online offering. Then the company starts making £20 million of profit and justifying a market cap nicely above today’s £170 million plus. I might not be personally buying the clothes but I still (continue to) back the Julian Dunkerton ideas. Buy Superdry (still).
Filed under: Superdry, High Street Group, InnovaDerma, Umuthi, Burberry, TomWinnifrith.com
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