SuperGroup, the fashion retailer behind the Superdry brand, recently reported good Christmas trading, but will it do even better by toning down the logos on its products?
Analysts at Oriel Securities seem to think so. In a note raising his recommendation from hold to buy, Oriel's Jonathan Pritchard said:
It has long been our contention that a more subtle approach to logo-ing garments was required, and the new SS12 ranges carry much less of the very bold and obvious fonts seen previously.
We think that this will widen the appeal of the brand, as it has always been our view that the underlying quality, fashionability and pricing of the clothes are very good. We just think the 'sandwich board' effect put some people off. We are most encouraged by what we have seen of the new range so far.
The company previously had trouble with its distribution system, but Oriel believes these problems could be behind it. Pritchard said:
Supergroup is righting 2011's wrongs, re-establishing a growth profile. Logos are shrinking and logistics are functional again. With rising internet sales likely to curb the appetite for physical stores, forecasts and returns will increase.
The shares have had a bit of a run but trade at no more than a sector valuation to May 2013. 2011 was far from a vintage year for the company but with earnings momentum beginning to be re-established, we think that the shares will rerate as the growth characteristics become clearer. We are upgrading to buy.
In the market SuperGroup has risen 44p to 706p, up nearly 7%.
