The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
‘Technicals’ isn’t something that I particularly get into. My entire portfolio looks like it’s going through the roof right now, and I’d like to take credit, but it’s all covid related news that’s driving it. Nothing has changed fundamentally aside from covid lockdown/open/lockdown for SDRY that can explain their increase. So, I would say the ‘resistance’ will be the next trading update that tells you how bad Xmas was. That’ll do it.
Try as I might, I just can't see a longterm future for SDRY. I am pleased with the recent run up in price from a 'priced to fail' valuation, and I think i'll be jumping out soon. Its nice to make money from a bombed out price, even if its based on relatively little in the way of good news. I've said before, there are many people on here that have absolutely no clue about this business, about this industry, or about fashion or brand. I was a supporter of JD, even though he handed control to Sutherland and watched his brand drop into insignificance. But, nothing I have seen so far makes me believe that there is a good chance of recovering to anything close to their heyday. The absence of shoppers that I mentioned in earlier posts, that was confirmed in the trading statement, speaks volumes. The uplift in ecommerce from a dwindling figure in previous years is really only a product of a lockdown. Compare SDRY numbers with other, more successful retailers and you will see SDRY's uplift is the bare minimum. Follow the pattern from prelockdown, to post, then back to see how this is fairing. The very recent improvement noted may well be down to the level of discounting to clear old stock, it doesn't say, but its a fair guess. The customers are simply not there, and i don't see where they are going to magically reappear from. I read all the industry magazines, and the fashion press. SDRY just does not figure as a brand of any interest. Teenagers in the UK have abandoned SDRY. It's simply not cool, and forking out for Zara Larsson seems a misstep for me, in much the same way as Idris Elba was. That Idris campaign lost money for sure, and any straggling self respecting teen with it.
The creative director (Nike football) has been in position for approaching 2 years. I've simply not seen enough from him to be convinced that this is not just a treading water exercise. There's more product with less obvious branding, but I don't see that as enough to drag customers in yet. And what is it with Dunkerton and these ridiculous 'vegan' trainers that he is banging on about and wearing in every article? Does he not know that the 'real' trainer brands do vegan too? What self respecting trainer buyer is going to don SDRY trainers? Come on now.
SDRY is not the 'King of Athleisure', as someone said on here.
JD and Jade are not 'fashion royalty'! I have no words....
February this year........
Yes, of course, many factors affect footfall. I hasten to add that i have visited stores in Centres, and on the high street, up to Scotland and down to London and in-between. When I say there is little footfall activity in the stores..I, obviously, mean in relation to the prevailing conditions and vis a vis the neighbouring retailers under the exact same weather, time of day, location factors.
I will say that in very recent visits, I have seen an increase in the number of gents (dads) trying on a jacket or two (which are of great quality for the price). Although I would expect nothing less at the time of year.
It doesn't give any information about online vs bricks and mortar comparisons....but you can take a certain perspective as to the desirability of the product if the stores are quiet, obviously.
On a separate point,I remain confused by their marketing. I think they are, too.
I'd be cautious too. I have travelled the length of this country, and visited over two dozen stores. I just don't see the foot traffic, at any time of day. Its not an exhaustive study, I grant you, but I can only say what I see.
Of course it’s speculation. Leaving with immediate effect, not serving any notice, not handing over, week before AGM. Not a good look.
Looking for 5th CFO in 5 years. As I said, Wills was bankrupted. Barker backed the wrong managerial horse, Wharton left for his ‘plural career’, mmmm yeah, I heard, don’t believe it. And now Gresham. Just not good for stability at the very least...
Nick Gresham, CFO has gone with immediate effect.
What is it with SDRY and CFO’s.
Shaun Wills had to go in 2015 (following his bankruptcy). Nick Wharton arrived and left, Dd Barker came and went, now Nick Gresham. They are onto their 5th CFO in 5 years. Something seems amiss.
Razor, have you noticed that nobody, nobody ever takes on the simple fundamental queries I’ve posed repeatedly? Everyone seems to think this should go up simply because, well, because it should. There are reasons the wider market is shunning this share, this ‘story’.
On a separate note, Frasers Group are having a storming day, simply off the back of a message saying there are ‘signs of normality’ returning.
Razor. It’s clear to me that JD is not going to relinquish the CEO role, so we are only looking for someone with a different skill set than that of JD’s. Less product based, more operational and international retailing.
If Gatemore have seen financial info that we haven’t, wouldnt that be insider trading?
Razor. I grant you, they are (finally) waking up to the fact that there are potential women customers.
Have you noticed that nobody attempts to address any of the simple, fundamental questions I’ve asked? I’m up for debate. I guess people just want the repetitive statements of being undervalued and heading to £3,4,5,10 by Xmas.
JD cannot do this himself. He has to bring in proper talent that knows the teen/youth/cool market on an international level or its toast if you ask me.
I’ll grant you, there is a noticeable increase in the exposure of womenswear on their insta. They’ve never been known for their womenswear offering, rather more known for a lack of womenswear. Neither JD nor Holder were strong there.
JD handed CEO over, his choice, to Sutherland. Why? Because JD is not really a CEO, and he’s not too about that side of the business. Sutherland was a ‘pro’ CEO, the wrong one for a lifestyle brand, but at least it was all he was supposed to do. So now it’s JD, with all his other distractions on top. Am I wrong?
After the EGM , the CEO walked, with the COO, the Global Retail Director, and an experienced HR Director. JD has taken on being CEO. He has had no COO since. My sources tell me the HR replacement is rather junior, and the retailer is from Wilko. Correct me if I’m wrong. (I acknowledge that the Sutherland ‘yes men’ were not at all right for the business, but there still a vacuum at the top as it stands). So we have a CEO with multiple businesses on the go, and a skeleton/junior top layer of management.
Product looks same to me as it did 2 years ago. Nike football man (Creative Director), what is he doing? Stores are overly full, and on heavy discount. Online is heavy discount too.
Pre covid, sales in decline. What exactly are people looking at to support a belief that sales are going to magically start going up? Who is sorting out US? Who is picking the EU store sites? Not the guy from Wilko surely??
I had hoped when JD took control. Nothing’s happening. What am I missing?
But what if the ‘clarity’ shows zero profitability and provides evidence of a stagnant unloved brand? I don’t think the market will like that either.
I keep asking for someone to describe what is being done differently in product and stores to generate the sales growth, how is the offering different to what wasn’t selling before? Nobody wants to explain why customers are going to magically switch on to the product again. Product looks the same, stores look too full, and massive discounting. I don’t like it.
I’m sceptical too. When people throw out terms like ‘priced in’, it’s a guess, isn’t it? Plenty said it was priced in at £5 , £4,£3....
I wish someone, anyone, would point out what I’m missing in regard to the observations I have about the product and the stores. Can you see the difference between Sutherland’s sdry and the current sdry? I can’t. How are the sales going to increase when it’s the same product in essence? Most of the top management walked, and JD comes in as a man with many business interests from cider to hotels and pubs. US flatlining, China pull out. Where’s the growth? And how is JD going to achieve without bringing in new talent? It will be difficult attracting the right sort of people to Cheltenham.
Hi Carllapos.
Sure, business was bad, sp reflected that. I’m aware of the sp, painfully so :( Anticipation for profit was somewhere between £10m and ‘zilch’. So we know for sure that hasn’t changed for the better.
For me, the sp is a reflection of the wider investing audience not believing in recovery, but believing the brand is a spent force. I have some sympathy to that perspective. I’ll await solid sales figures to prove the general perception in the retail industry that it isn’t the case.
Survival...is one thing, securing new financial arrangements is one kind of exercise. The ‘next step’ you refer to, a ‘return to sales growth’ is a different matter entirely. I’ve said many times before that I had wanted to see real evidence of change once Dunkerton returned. I simply have not seen it. He has fewer people there than when he took over. I’ve not seen any new talent, I’ve not seen any change in direction, shopfits, product offering. If it wasn’t selling before, why will it start selling again? It’s a serious question. Can you identify where things are different? Every store I visit has the same issues that I’ve seen for several years, too crammed, confusing layout of product, repeat product in places, ineffective delineation of product by type or genre. It’s almost as if a bloke from Tesco’s was responsible.
From the conversations I’ve had, there are some sales going through, but inevitably at super discounted levels, especially online. Doesn’t paint a hopeful picture.
I do know exactly who JD is, having met many times.
I am comforted by the recent price increase, every penny heading north is to be congratulated.
But, a short term blip in online ( which has normalised), for me, is really nothing to get excited about. ‘Confident’ and ‘better than anticipated’ without context, don’t mean a great deal. Yes, finance sorted, sdry has ‘survived’ and can get on with the transformation, whatever that means. Fundamentally, not a great deal has changed for me in terms of how I see the progress from an improvement of the brand and associated sales.
It will be very interesting to see what level of margin the revenue is producing. I think it will be small.