Supergroup’s share price surges as new strategy includes an Idris Elba designed fashion range and 2016 dividend
British fashion retailer Supergroup, the maker of Superdry clothing, is roping in potential future Bond Idris Elba to help grow its business.
The star of Luther and The Wire will collaborate on designing a premium fashion range for Supergroup, the retailer has revealed, among a host of plans which sent shares surging six per cent in early trading this morning.
"Today we are setting out our strategy to deliver sustainable growth at Supergroup, as we continue progressing towards our goal of creating a global lifestyle brand," said Supergroup boss Euan Sutherland. "Superdry represents British innovation, quality premium products at affordable prices sold to customers around the world. Superdry is an iconic brand with a strong heritage and we will continue to broaden and strengthen its appeal to customers across countries and age groups."
In addition to the range from Elba – who just happens to be a friend of Supergroup founder Julian Dunkerton – the company will also begin paying a dividend, beginning with an interim divi in 2016 and has added RBS and Morrisons non-executive director Penny Hughes to its team in the same capacity.
Sutherland said the fashion group has taken over sole distribution in the US market for a cash consideration of £22.3m, ending a licensing partnership with SD USA, following a similar move in Scandinavia, Germany and Spain in recent months.
"Strategically, taking control of our product and presence in North America is an important and natural step in realising our ambition to create a global business. It gives us the opportunity to enhance our brand presence there and significantly build the long-term value of our business," Supergroup said. Here are the details of the deal.
The cash consideration of £22.3m gives us direct control of the distribution of Superdry products in the key strategic markets across North America. The consideration, funded entirely from the group's existing cash resources, includes stock, shop fixtures and fittings valued at around £11m and, as part of the transaction, 15 leases will be assigned to the group.
The one-off transaction costs are expected to be c. £0.7m and other non-underlying costs are expected to be £9m in FY15 and around £8m in FY16. The business made an operating loss of £5.1m in the year ended 31 December 2014. The group expects to halve the operating loss in FY16 and accordingly, it is anticipated that the impact of this transaction will be earnings dilutive in FY16. The group expects the North American operations to be profitable from FY17.
On its new dividend policy, the firm said:
- the board intends to adopt a progressive dividend policy at a prudent cover targeting 3.0x – 3.5x;
- the board also intends to adopt a dividend formula so that the interim dividend will be the equivalent of approximately one third of the total dividend for the previous year; and
- if, over an extended period, excess capital has not been deployed, the Board will consider one-off returns to shareholders whilst maintaining flexibility through a positive cash balance.
