SuperGroup sees it share price fall 13%

By Graeme Dickson
Updated:

 

Last week's ADP figures, giving a snap shot of how US jobs in the private sector are doing, made grim reading given the expectation of a much higher than expected employment figure.

This set the tone for lowering forecasts of the Non-Farm Payroll data last Friday, which includes job creation directly associated with the government. Sadly the figure proved even worse than the lowered expectation.

The FTSE fell from 5928 last Wednesday, by just over one per cent or 64 points, to finish yesterday at 5864. Last Thursday, the index dropped 80 points to close at 5847 as a follow on from the overnight slump in the US after news that the ADP private jobs figure for May came in at 38,000 against an expectation of 175,000 new jobs created.

Couple this with the downgrading of Greek debt by Moody's led for the market for a relatively sharp decline.

The FTSE added just eight points on Friday to close at 5855 in what seems like a 'dead cat bounce' despite the Non-Farm Payroll figures coming in well below market expectations.

Restructuring hopes for Greek debt again played a pacifying role in calming the markets following earlier data about the US jobs market.

On Monday the FTSE added another eight points to close at 5863, again appearing to be a continuation of Friday's modest bounce given little significant news on the economic front.

Yesterday the FTSE added just a single point to close at 5864 following another lacklustre day on corporate and economic news, almost typical of a summer market.

Again we are still trapped in this 5850 to 6100 range but a fall below 5850 for a few days may cause some parties to throw the towel in. If so we could be heading for the next level of support at 5600.

On the other hand if 6100 does break then you could see 6250-6400 as the next level of resistance. A tough call where to predict the FTSE in the short term given we are approaching the relatively illiquid summer markets.

Superdry fashion model

Big mover: How you can profit

The most notable mover in the FTSE 350 during the last week came from fashion retailer SuperGroup (SGP), the company that owns the SuperDry brand.

The shares fell since last Wednesday's close by 12.78 per cent to 979.5p yesterday following a reiteration of a sell note by renowned analyst Sanjay Vidyarthi of financial group Espirito Santo.

The analyst has expressed concern that SuperDry's 20 per cent off voucher to its registered customers over the last weekend, while its move to the old Austin Reed site along Regent Street might be a bit more than it can chew and that seems to be part of the reason for the resolute sell stance. However, the company has no debt and trades on a price to earnings estimate of 11.38 compared to the current rating of 21 times.

There are a number of bears attacking the stock but equally the bulls are making their voices heard and perhaps a pre-close trading update ahead of its preliminary results in mid July might be the catalyst to turn around the shares recent misfortune.

Keep an eye on…

Ashtead (AHT) next week will announce its preliminary results on Thursday 16 June.

The construction equipment rental business, as highlighted in my One to Dump column, receives the vast majority of its income in US dollars, which following its recent performance against sterling, may force analysts to revise their forecasts.

Additionally the company is trading on a lofty 24 times 2012 earnings while the balance sheet also needs addressing at some stage with a net gearing figure of 165 per cent.

The company is highly geared to the continued recovery and progression of the US economy. Given the recent ADP and Non-Farm Payroll figures I would not be over enamoured in holding the shares.

Highlights from the FTSE 350 over the last week include:

• On Thursday Misys (MSY) added one per cent to 371.9p on talk that it was about to offload its banking software division.

• CSR (CSR), the wireless connectivity firm, fell 3.9 per cent to 337p after broker Numis downgraded the group to add, from buy, on the back of a profit-warning from its major customer Nokia.

• Mezzanine finance specialist Intermediate Capital (ICP) slipped 6.2 per cent on Friday to 323.6p following a downgrade from investment giant Credit Suisse.

• Autonomy (AU.) was in demand with the shares up four per cent to 1825p after it completed the $380 million (£234 million) acquisition of assets from Iron Mountain. The purchase is seen to boost the group's cloud computing capability.

• On Monday Peruvian silver miner Hochschild Mining (HOC) slid 8.5 per cent to 500p following news that left wing candidate Ollunta Humala won Peru's presidential election, giving fears to Chavez style nationalisation and tax hikes. • Media buyer & market researcher Aegis Group (AGS) added almost seven per cent to 151p on reports it was about to sell its market research division to think-tank Ipsos.

• On Tuesday All Bar One owner Mitchells & Butler (MAB) added 3.75 per cent to 331.9p on talk that Bahamas based Joe Lewis and Irish investor J Magnier are teaming up to make a joint bid for the pub group.

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