SuperGroup slides 14% after Easter and eBay hit sales

With markets recovering after two days of dips, a 14% slump in the shares of SuperGroup stands out even more.

The fashion retailer behind the Superdry brand warned full year profits would be at the lower end of City forecasts of £61m to £65m after fourth quarter like for like sales fell 3.1%. It blamed the late timing of Easter and a planned reduction in lower margin sales through eBay. The shares, which fell 20% in April, are currently down 191p to £11.57. Analyst Nick Bubb said:

The SuperGroup share price has been notably weak recently, as if something was amiss in current trading, and today's pre-close update indeed confirms that retail trading has been disappointing, with like for like sales slightly down in the fourth quarter, by 3.1% or by 1.3% adjusted for the reduced eBay sales.
Despite strong wholesale orders and a smooth transition to the new warehouse, SuperGroup has warned that full-year profits will be at the lower end of the...range. On the conference call with analysts at 8am, finance director Shaun Wills pointed to the impact on retail of the late and weak Easter trading period, the strong sales of outerwear in the fourth quarter last year because of the cold spring weather and the increased promotional activity in the young fashion market pre-Easter. But the City is nervous about the history of SuperGroup profit warnings and the shares are down... in early trading.

Freddie George at Cantor Fitzgerald kept his buy rating but said:

No explanation for the decline in volumes other than there is mention of a challenging trading environment. We suspect that the company has had a disappointing April and there has been weaker momentum in womenswear against difficult comparatives last year.
Following this update, we are marginally revising down our 2014 pre-tax profits forecasts of £62.5m to £61.5m taking earnings per share down from 57.0p to 56.1p but still representing growth of 17% on the previous year. For the time being, in view of the operational gearing, arising from the infrastructure investment, we are retaining our 2015 forecast of £70.0m (earnings per share of 63.6p). We reiterate our buy recommendation but are reducing our target price to 1,500p from 1,650p. There has now been significant investment in infrastructure and management. There also continues to be a great opportunity to drive international sales boosted by the announcement of several recent deals, including the acquisition of its German agency business for £3.5m and the link-ups in Turkey and SE Asia. The next step may be the acquisition of the US license. In addition, the company will continue to drive on-line sales.

On a busy day for corporate news, and ahead of meetings of the Bank of England's monetary policy committee and the European Central Bank, the FTSE 100 is up 31.13 points at 6765.31. Better than expected Chinese trade data and Wednesday's more conciliatory tone from Russia's Vladimir Putin over Ukraine has soothed some of investors' recent nerves.

There is a definite split between the good and the bad as far as the share price reaction to the various company updates is concern.

Moving higher are Barclays, up 13.25p to 256.55p in the wake of its strategic plans which include 19,000 job losses, and BT, 9.4p better at 386.2p after in line profits unchanged at £6.1bn despite hefty investment in its sports operations.

Prudential has climbed 33p to 1410.5p following news of 29% growth in first quarter new business, while Barratt Developments is up 8.2p at 384.5p after announcing a 47% rise in forward sales.

But the dismal times at Morrisons continue, with its shares 3p lower at 187.8p after a 7.1% fall in underlying first quarter sales.

British Gas owner Centrica is also under pressure, down 7.2p at 319.6p as it warned of a reduced outlook for earnings in 2014.

Meanwhile AstraZeneca has added 85.5p to 4716.5p on talk of a higher bid of around £53 a share from predator Pfizer.