The Superdry share price keeps crashing! What next?

Earlier this week, the Superdry share price collapsed to an all-time low. With sales growth weakening, does this fashion brand have a future?

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This week, life got a whole lot worse for long-suffering shareholders of fashion brand Superdry (LSE: SDRY). On Tuesday morning, the Superdry share price crashed to an all-time low, before bouncing back.

The shares slump and slide

Just over five years ago, the Superdry share price was testing record highs. On 5 January 2018, this stock closed at 2,074p. Alas, it then began a steep slide, closing at 405p on 14 December 2018.

Things got even more painful for shareholders during 2020’s pandemic panic. On 20 March 2020, the stock closed at 103.3p. Fair enough — after all, who was buying fashion jackets during Covid-19 lockdowns?

After a strong recovery in 2020-21, the stock closed at 472p on 14 May 2021. But it’s never been anywhere near that level ever since. Earlier this morning, this stock hit a record low of 82.5p. Yikes.

As I write late on Tuesday afternoon, the Superdry share price has rebounded to 87.26p. This values the chain at £71.7m — a tiny fraction of its worth in its glory days.

Here’s how the shares have performed over seven different periods:

One day-2.8%
Five days-22.5%
One month-19.1%
Year to date-31.8%
Six months-30.0%
One year-48.6%
Five years-94.5%

Over all seven timescales, this former growth stock has dived. It’s down by three-tenths over six months and has almost halved over one year.

Even worse, it has collapsed by almost 95% over half a decade. Shockingly, £1,000 invested into this stock five years ago would be worth just £54.80 today. That’s brutal.

Superdry sales stumble again

Superdry was founded as Cult Clothing by Julian Dunkerton and a business partner in 1985. Beginning with one store in Cheltenham, the group expanded rapidly, favouring university towns

In 2010, the group floated in London at a share price of 500p, valuing it at £395m. But it faltered late last decade and Dunkerton returned to head the company in 2019, aiming to turn things around with a new strategy.

Last Friday, 14 April, Superdry released its latest trading statement. Blaming the cost-of-living crisis and bad weather for poor sales in February and March, the chain scrapped previous profit guidance.

Instead of breaking even this year, it might be loss-making, due to a “challenging trading environment”. It expects revenues of £615m to £635m this year, slightly up from £609m in 2022.

Does this fashion firm have a future?

I’ve never invested in fashion brands, largely because I’m the least fashion-conscious person I know. Also, experience has taught me that fashion labels often go stale over time as consumers are drawn to new names.

So is Superdry on the way out, or can it turn the tanker around? One warning sign is that the group is considering raising equity by issuing new shares worth up to a fifth of its current market value (£14.3m).

On the other hand, it has revitalised its product offer and has identified £35m of cost savings, with more to come. This could mean store closures and job losses, but could improve the bottom line.

As a long-term value investor, I won’t be buying Superdry shares any time soon. They’re just too volatile and risky for me. Then again, I could imagine some younger and braver investors buying these shares on hopes of a sustained recovery!

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Cliff D'Arcy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.

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