Peel Hunt lowers estimates on Superdry as weather and FX clouds loom

Analysts at Peel Hunt lowered their forecasts for Superdry after the retailer announced a series of blows to its bottom line on Monday.

Superdry revealed a £10m hit to profits as a result of the hot weather seen across the UK in recent months, in keeping with what the broker had witnessed at other outfits, and also announced a £8m hit from hedging losses. Peel Hunt also downgraded its estimates by a further £5m in anticipation of accelerating digital marketing initiatives throughout the second half.

Peel Hunt kept its 'buy' rating on the firm intact despite the news, but in total revised its full-year pre-tax profit estimate lower by £25m to £87m, stating that its forecasts now looked "more achievable", but did note that investor confidence was likely to be knocked by the £8m FX blow.

The broker noted that with Superdry's offerings continuing to over-index in outerwear, with 45% of sales represented by hoodies, jackets, coats, sweats and heavier weight items, the warm start to autumn had also led to a shortfall against expected sales performance.

However, Peel Hunt said that overall brand performance was "not in question" and highlighted the fact that Superdry had enjoyed stronger sales on the few weather appropriate days throughout September.

Peel Hunt said: "After this morning's share price fall, the stock has held onto its c10x PER. This still underplays the strength of the group's balance sheet and the global prospects, although investors will need to see an acceleration in performance over peak to re-instill confidence in execution."