The winds of change in fashion can change quickly and brands that were once considered cool can fall out of favour quickly if they’re not properly nurtured.
Take Superdry, for instance. It had been a roaring success story, with sales growing rapidly after its 2010 IPO, as it became a global player and for a period in the middle of the last decade it comfortably outperformed the FTSE All-Share.
A noticeable decline in its valuation began in 2018, as founder Julian Dunkerton stepped down following a disagreement with then-chief executive Euan Sutherland over its strategy. Following a tussle for control, Dunkerton was reinstated as chief executive in April 2019.
Things haven’t gone swimmingly since — Superdry has posted three years of losses on dwindling revenues. Last month, it reported a 21 per cent decline in sales for the year to April 30 of £556.1m but pre-tax losses were cut to £36.7m, compared to £167m a year earlier.
Revenue picked up in the final quarter and Dunkerton argued that the business was being turned around and the brand evolved. Although its share price is up about 23 per cent so far this year, Superdry remains undervalued on many metrics when compared with peers and Dunkerton is clearly confident about its prospects. He has just spent almost £1m buying up shares, taking his stake in the company to 20.7 per cent.
Kingfisher bosses look to capitalise on DIY boom
Customers of retail group Kingfisher have spent much more of their money since the onset of the pandemic on fixing up their main assets in the hope of making them better and more valuable. The company’s management have been doing the same.
Chief executive Thierry Garnier, who was appointed in March last year, began a reorganisation of its commercial strategy in September, which has taken in everything from product sourcing and supply to pricing and marketing. It has sought to reduce costs by using space more efficiently, trialling more compact stores and introducing self-checkout terminals, for instance.
In the UK and Ireland, where the company generates more than half of its revenue, it has been helped by a booming home improvement market. The repair, maintenance and improvement sector is set to grow by 14.3 per cent this year, according to the Construction Product Association’s autumn forecast. Kingfisher has outperformed, though, with UK & Ireland sales up about 30 per cent and retail margins growing by 1.3 per cent to 16.2 per cent. In France, where it operates through the Castorama and Brico Dépôt brands, sales were 20 per cent higher and its retail profit margin widened to 5.3 per cent.
The company expects to make a full-year adjusted profit of between £910m-£950m (2020: £786m) and is planning up to £200m of buybacks. Garnier and new chief financial officer Bernard Bot have shown their confidence, buying £130,960 and £98,220 worth of shares, respectively. At the end of last week, 1.8 per cent of its shares were loaned out to two short sellers. However, one of these — hedge fund manager Citadel’s European arm — appears to have unwound its position, meaning this figure has reduced to 1.3 per cent. Kingfisher’s share price has risen 25 per cent since the start of the year.
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