Superdry (LSE: SDRY) At one time my clothes were the main thing. The price of superdry shares was also much higher than the current level. So what’s happening recently and should I consider adding these cheap shares to my portfolio?
Superdry share price journey
Superdry has more than 750 stores in 65 countries. With such a strong physical presence, Superdry relies heavily on football. The death of the High Street shopping experience has recently been well documented. A coup of online, fast-fashion, e-commerce-savvy brands has made it even worse. The epidemic led many shoppers to shop online as shops were closed due to restrictions. Initially brands with physical positions had to adopt a strong online presence to keep up with the competition.
As I write, the price of Superdry shares is trading at 270p per share. A year ago it was traded for 180p per share, equivalent to a 50% return. It is noteworthy that in the past, the stock has reached over 2,000p per share! Superdry has been on the downside for some time but a rebuild is underway. Could this rebuilding Superdry once again become an effective investment?
Mixed results and reconstruction
At the end of last month, Superdry announced full-year results for the year ending April 20th. I think the results were a mixed bag with some encouraging signs. Due to the epidemic, about 40% of store days were wasted due to restrictions. These closures will affect overall performance. But online sales have eased these closures. Revenue for the full year fell 21% overall. Superdry share prices have risen slightly since the results were released.
Superdry reported an operating loss of .5 29.5 million. No harm discouraged but in this case, it’s good news. Operating losses were high enough for 2020, at 9 159.4m, so things are moving in the right direction. Indeed, analysts predict that Superdri may return to profitability in 2022 as the effects of the epidemic subside.
Superdry has lost significant market share over the years. Following this, the price of superdry shares has come down. In addition, competitors are ahead of one-time high-flying brands. The management of Superdry has taken steps to rebuild the brand and regain market share.
First, Superdry has launched five new collections. Since then, it has decided to use sustainably sourced materials for 33% of its product portfolio. It will go down a treat with ethical investors. ESG investments are gaining traction at the moment. Finally, it has taken steps to improve efficiency in its warehouses by deploying robots for its online activities.
Risk and my verdict
Overall, Superdry is working hard to solve its problems. The main risk I see when investing in superdry stocks is competition. I believe there are more powerful brands where there is better brand recognition, more market share and much more intelligent operations. As Superdry rebuilds to maintain, these others will continue to work hard to continue their rise.
I think Superdry has to work hard to regain its former glory. I don’t think the price of the superdry share will return to four figures anytime soon. I will not personally invest in stocks now. I believe there are better opportunities elsewhere.
Jabran Khan has no position in any of the mentioned shares. Opinions about the companies mentioned in this article may differ from those of the author and therefore our official recommendations for subscription services such as Share Advisor, Hidden Winner and Pro. Here at The Motley Fool we believe that considering the insights of different ranges makes us better investors.