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Superdry sinks further underwater despite RBC upgrade

The jackets-maker warned last week that underlying profits come in anywhere between zero and £10mln

Superdry PLC -

Superdry PLC's (LON:SDRY) shares continued to tumble on Monday after one broker cut its price target on the back of the horrible profit warning at the end of last week, but another saw fit to upgrade its rating.

Analysts at Liberum snipped their target down to 500p from 600p in a note to clients.

This followed Friday’s update that revealed the 10-week period since Black Friday saw store sales fall 18.5%, ecommerce decline 9.3% and wholesale tumble 16.9%, equating to £23mln of lost sales in retail and £5mln in wholesale.

The retailer warned this could see underlying PBT come in anywhere between zero and £10mln.

READ: City analysts and Twitter users agree that Superdry has problems

While Liberum said it was reducing its estimates towards the bottom end of this range, analysts at RBC Capital Markets reckoned the number will come roughly in the middle, £5.2mln in fact.

RBC upgraded its rating to ‘outperform’ from ‘sector perform’ and said “turnaround potential appears attractive on a relative risk/reward basis”, moving its price target to 500p.

This was in anticipation of “better brand positioning and product offer” from the autumn/winter collection later in the year, as analysts “believe the building blocks are in place for a potential turnaround”.

Feel that the company may be approaching the bottom of the earnings downgrade cycle, RBC think the pullback in shares “provides an attractive entry point”.

However, the challenges the business is facing from a macroeconomic and category weakness perspective were acknowledged and liquidating old inventory “will continue to prove tricky” as the strategy calls for lower level of promotion.

Quick facts: Superdry PLC

Price: 103.388 GBX

Market: LSE
Market Cap: £83.4 m

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