SuperGroup Plc (SGP) fell the most ever in London trading after the owner of the Superdry brand lowered profit guidance for a third time in about six months.
SuperGroup plunged as much as 40 percent and was down 39 percent at 347 pence as of 9:04 a.m. That reduced the market value of the Cheltenham, England-based clothing chain by 178 million pounds ($286 million) to 272.8 million pounds. The company was valued at 1.28 billion pounds in May 2011, a year after its initial public offering.
Pretax profit for the year ending April 29 will be about 43 million pounds, the company said today, less than the 50.7 million-pound average estimate of nine analysts compiled by Bloomberg. The reversal marks a further backward step for a company that has increased sales almost 10-fold in four years.
Profit will be reduced by about 2.5 million pounds due to “arithmetic errors” in forecasting wholesale business, SuperGroup said. A further 2 million-pound shortfall will be caused by franchise and wholesale clients not drawing inventory until after the year-end, while increased operating costs in the retail business will hurt earnings by the same amount.
The setback “is more to do with structural problems associated with a group that has seen meteoric development over the last few years rather than any underlying problem with the brand,” Freddie George, an analyst at Seymour Pierce in London, said in a note. He cut his price estimate to 650 pence from 1,000 pence and kept a buy recommendation on the stock.
The accounting error in the wholesale business was “a genuine human mistake,” Chief Executive Officer Julian Dunkerton said on a call with analysts. No sales have been lost and the business continues to grow rapidly, he said. Retail sales have also matched company expectations, the CEO said.
SuperGroup said the reasons for the latest profit downgrade will have “a minimal impact” on projections for fiscal 2013. A further update will be issued on May 10 as planned, it said.
Retail sales have also matched expectations, although a “slight change of mix” toward more use of EBay Inc. (EBAY) and outlet sales versus higher-margin store sales will affect profit by another 2 million pounds, the CEO said.
“Whilst it’s disappointing to finish the current year in this manner our projections for the next financial year remain unchanged,” Dunkerton said.
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