SuperDry hit by surprise April warm spell

By Graeme Dickson
Updated:

 

The FTSE fell 115 points or 1.9 per cent since last Wednesday to yesterday's close of 5861, primarily on falling commodity prices and concerns about Greece's debt issues.

Last Thursday the FTSE dropped 31 points, fuelled by concerns over China's inflation rate of 5.3 per cent, above the government's target of four per cent: the thought that higher inflation, will lead to further monetary tightening.

Metal prices fell accordingly, which in turn affected the resource laden FTSE 100.

Additionally the public sector strike in Greece, which turned violent later in the day, gave concern that Greece will be unable to service its debt on the current terms.

The following day the blue chip index dropped a further 19 points to 5925 after UK industrial output data failed to impress. Meanwhile the US Consumer prices for April rose to 3.2 per cent, the highest rate since October 2008.

On Monday the FTSE was almost flat at 5923 points, with the index at one stage down 62 following the weekend news that IMF chief Dominique Strauss-Kahn was arrested for sexual assault, giving some anxiety to those thinking that any renegotiation of Greece's debt will de delayed.

Yesterday the FTSE managed to fall 62 points to 5861 after Germany's ZEW economic sentiment index fell to 3.1, down from 7.6 in April.

Additionally there was talk that Greece's debt situation was unsustainable and that a 'soft' restructuring would have to come into effect, in order for the country to have a realistic chance of servicing and paying back its loans.

The FTSE is still trading in the 5850-6100 range. If we see a close below 5850 I think there is a fair chance we could revisit 5600, but even if this happens, there still seems to be enough buyers lurking in the background to take the index ultimately higher.

Otherwise aim for just shy of 6100 and see if we can close above it to see if it forms a break-out.

Big mover: How you can profit

The most notable move in the FTSE 350 over the last week came from the SuperDry fashion brand owner SuperGroup (SGP), with a 30.1 per cent fall to 1117p.

The stock fell dramatically last Tuesday after it revealed to the market that it was caught out by the surprise warm spell during April and failed to get its summer range out in time.

Superdry fashion model

Shares in the firm peaked in February this year at 1900p, having risen from the IPO price of 500p back in March 2010.

It still has plenty of investors in profit, most notably the management with founders Dunkerton and Holder controlling 48 per cent between them.

Their lock-in period expires in September and it will be interesting to see what their intentions are both with their shares and where they wish to take the business.

It is trading on a price to earnings ratio of 23.89 falling down to 12.22 by 2013 if they can meet expectations.

The current trend looks in the very short-term downwards but it also looks oversold and at some stage, if the company can prove this was just a blip, the stock might recover strongly.

Highlights from the FTSE 350 over the last week include:

- On Thursday SuperGroup (SGP) fell 22.5 per cent to 1219p for reasons mentioned above

- Private equity investor 3i Group (III) rallied 6.7 per cent to 289.9p after it revealed in its preliminary results that assets under management rose from £9.6 billion to £12.7 billion, while its Net Asset Value per share increased from 321p to 351p.

- On Friday transport specialist Stobart (STOB) slipped 5.67 per cent after it dismissed a report by The Daily Telegraph that the FSA were investigating a property portfolio was sold by its chief executive to Stobart Group.

- Metrology and healthcare equipment specialist Renishaw (RSW) jumped 6.27 per cent to 1780p following a positive read-across from its peer group associate Spectris (SPX), after it issued an upbeat AGM statement the evening before

- Retailer Dixons (DXNS) jumped 13.91 per cent to 18.42p on Monday after talk emerged that Kesa was thinking of pulling Comet, Dixons arch rival, out of the UK

 - Yesterday was unsettling for investors in chip designer ARM Holdings (ARM), following a read across from a profit warning issued by Hewlett Packard.

 - African Barrick Gold (ABG) slipped 4.8 per cent to 473.5p following reports that 800 intruders attacked police at its North Mara site in Tanzania, resulting in seven fatalities.

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