SuperGroup, owner of the SuperDry fashion label, prides itself on providing full-price merchandise (except, of course, at its several outlet stores).
So what should we make of this advert, which helped knock 6 per cent off the share price on Friday?
Now, that’s SuperGroup’s first ever sale in the UK, and you might think, a sign that the brand is reaching saturation point, or the company has too much unsold stock.
Not, according to house broker Seymour Pierce, which reckons everything is tickety-boo:
On Friday, SuperGroup announced a one off limited promotion for the benefit of registered internet users – 20% off all Superdry products if the user prints off a voucher and redeems it in the store. It aims to reward internet users – a similar strategy successfully adopted in the past to reward student union customers. This action, in our view, should not be seen as a change in strategy and not in anyway a change in policy re discounting.
As does Numis Securities:
Rewarding internet customers: The promotion is apparently being run as a ‘one-off’ event to reward internet customers and, presumably, encourage online shoppers into store. It is worth noting that one of the reasons for the Q4 slowdown was cited as being the non-repetition of several student promotions last year, suggesting that, at least in part, the activity has been shifted between quarters.
Stock risk mitigated by perennial product and new stores: After the soft Q4 performance, followed by some tougher trading across the High Street in recent weeks, we would have expected stock levels to be running ahead of budget. However, we understand that any overstock is not severe, and is mitigated considerably by the perennial nature of the product; only around 25% of products are seasonal and, with new stores continuing to open, the bulk of stock should be dealt with.
Perennial?
We thought that only applied to plants — not T-shirts with Japanese slogans plastered all over them.
Anyway, SuperGroup will doubtless explain all at its investor/strategy day on June 20.
Meanwhile, at ASOS its double all round.
From the Daily Telegraph:
It used to be called ‘As Seen On Screen’, but perhaps ‘A Shot Of Sambucca’ would be more appropriate.
Staff at ASOS.com, the online retailer and a recent stock market darling, have been told that they can leave the office early on Fridays until the Autumn. They are also being given a free bar in the staff canteen on the last Friday of every month.
Update: 09:15am
Nick Bubb at Arden Partners chimes in with his thoughts.
Poor old SuperGroup has been massively de-rated, to allow for the risk that the brand has lost its edge, so that it is now trading on under 15x the current year, even though it should still be growing EPS at least as fast as ASOS. But the bears got very excited on Friday about the news that Online customers of Superdry got a voucher for 20% off everything in-store at the weekend, despite the long-standing policy of not discounting.
Needless to say, the stores weren’t offering 20% off to everybody, but the lines are getting a bit blurred and Superdry will need to make sure that its policy of growing Online sales with lots of customer promotions and deals doesn’t cannibalise the Retail business. We look forward to hearing more about this Online growth impact at the Analysts Day in Cheltenham on 20 June and still hope that SGP have some good news saved up for this event.
Related links:
Superdroop – FT Alphaville
SuperTramp – FT Alphaville
Supertrap – FT Alphaville
Prada sets price range for flotation — report.