Supergroup Sees Profit on Target on Faster Sales Growth

Supergroup Plc, the U.K. owner of the Superdry fashion chain, said it expects to meet analyst profit expectations after reporting accelerated revenue growth over Christmas as it sold more jackets, knitwear and gifts.

The stock rose as much as 7 percent after the company reported sales at stores open at least a year rose 11 percent in the 13 weeks ended Jan. 27, the Cheltenham, England-based retailer said in a statement today. That’s faster than the average 2.4 percent increase from five analyst estimates compiled by Bloomberg, and exceeds the prior quarter’s 5.8 percent gain.

Gross margin, a measure of profitability, will be as much as 0.75 percentage point higher than last year as Supergroup reduced the cost of producing its clothing ranges and it sold more items online and in stores, rather than at its discount outlets. Supergroup is seeking growth by opening stores across Europe, such as its first owned store in Germany, and 15 franchise outlets.

“This update should represent a turning point in the company’s fortunes,” said Freddie George, an analyst at Seymour Pierce, in an e-mailed note. “After a year of consolidation, the company has now established a platform in terms of infrastructure and management to push ahead in developing the brand” online and overseas.

Total sales climbed 12 percent to 115.1 million pounds ($180 million), Supergroup said. That compared to the prior quarter’s 20 percent increase. Analysts are estimating pretax profit for the year ending April 28 at 49.3 million pounds, on average, the company said.

Supergroup rose as high as 678 pence and traded at 670 pence as of 8:20 a.m. in London trading. The stock has advanced 19 percent this year.

(Updates with shares from second paragraph.)
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