SuperGroup Plc (SGP), the U.K. owner of the Superdry fashion chain, expects to cut prices this year as it adds suppliers in India and cotton costs ease, Chief Executive Officer Julian Dunkerton said.
“By the autumn you’re going to see price decreases,” the executive said in a telephone interview. “It will be partly the cotton issue and partly better sourcing.”
Some of its most popular items like hoodies will remain static in price, the CEO said, while garments such as outerwear will fall, he said. The comments contrast with Next Plc, the U.K.’s second-largest clothing retailer, who last week forecast selling prices will be stable.
SuperGroup rose as much as 6.6 percent in London trading and was up 2.1 percent at 562.5 pence at 9:08 a.m. The Cheltenham, England-based company said today same-store sales rose 5.8 percent in the nine weeks to Jan. 1 while wholesale revenue fell 4 percent.
“While the retail performance is reassuring, the wholesale slowdown in the U.K. may continue to give some cause for concern on how far SuperGroup can extend its profile,” Sanjay Vidyarthi, an analyst at Execution Noble in London, said in a note. He has a “neutral” rating on the shares.
The retailer has added suppliers in India and Turkey, Dunkerton said. “There will be some margin capture going forward and some price decreases,” he added.
“We’ve had a solid Christmas so you know I always say if you’ve got the right product everything will fall into place,” Dunkerton said.
Accessories, knitwear and jackets did “incredibly well,” according to the executive. Sales of accessories more than doubled with phone covers, scarves and gloves.
“Obviously the broader macro environment is interesting, but I really feel we’re making big product advances this year,” he said. “I feel comfortable.” The retailer is adding products across all its lines such as women’s perfume.
SuperGroup, which opened a store on London’s busy Regent Street in December, said it’s on track to open 20 stores in the fiscal year ending in April. The company is “actively looking abroad, particularly Germany” to open stores, Dunkerton said.