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Directors’ Deals: Superdry chief bets on ‘premium’ turnround
Investors remain unmoved by green shoots of recovery in latest trading update.
Like many listed retailers, Superdry (SDRY) has been falling out of fashion as inflation and rising living costs threaten to disturb the post-pandemic rebound. This is the latest struggle that has faced the faux-Japanese clothing brand, which is attempting to recover after a three-year stint of posting annual losses.
Superdry’s difficulties first came to light in 2018 after a boardroom tiff led to the temporary removal of co-founder and chief executive Julian Dunkerton. Despite his return to the business in 2019, shares have continued to fall, now resting below a tenth of their value four years ago.
Since then, Dunkerton has pioneered a “premium” revamp to mend profitability, by steering away from discounts and increasing full-price sales. The signs have been promising so far. The apparel retailer swung to a £4mn half-year profit to October 23, compared with an £18.9mn loss during the same period last year, thanks to higher in-store sales.
However, investors remained unmoved by these green shoots of recovery in its latest trading update, with shares continuing to fall in line with sector-mates Joules (JOUL) and Ted Baker (TED), whose low valuation has spurred takeover bids from private equity.
Superdry’s forward PE of 8.5 makes shares “look extremely cheap”, according to broker Liberum, which expects the retailer to return to profit in 2022.
The valuation and turnround progress could be behind Dunkerton’s recent £1.15mn share purchase, with the co-founder buying 805,172 shares at an average price of £1.42 each. Dunkerton has steadily increased his stake in recent years, having spent £1mn on two bulk purchases in October 2021, on top of a £1.5mn buy-in a year earlier.
Investors may have appreciated this vote of confidence, as shares gained 7 per cent in the week following Dunkerton’s latest purchase.