SuperGroup (LSE: SGP), owner of the UK fashion brand Superdry, looks set to deliver another successful year of growth. The international branded-clothing retailer delivered a superb performance during its peak Christmas trading period, which followed on from a strong first half to its 2016/17 financial year.
Super figures
In its most recent trading update, the Cheltenham-based group said that it had performed well during its peak Christmas trading period, with retail revenue of £162.1m representing an improvement of 20.6% year-on-year. The impressive figures reflected continued with like-for-like growth of 14.9%, and the positive impact of the group’s store expansion programme, along with the benefits of the weakness in sterling. During the 10-week period to 7 January SuperGroup opened nine new stores, adding 74,000 sq ft to its trading space.
The successful peak trading period followed on nicely from a strong first half performance that saw the retailer generate sales of £334m, a 31% improvement on the £254.7m reported for the same period a year earlier. Sales from its stores were up 25% to £215.2m, with wholesale revenue surging 43.8% to £118.8m. Most encouraging was the increase in online participation, which now accounts for 21.6% of total retail revenue.
Currency tailwinds
There’s no denying the effects of favourable currency movements, which contributed around one-third of revenue growth. But the company has been performing well even without the benefit of a currency tailwind. The group’s expansion plans also seem to be in full flow, with 12 new stores opened during the first half of the year, resulting in a 19% increase in average trading space. There were also 31 new international franchised and licensed stores, increasing the size of the overall portfolio to 304.
SuperGroup has managed to achieve strong growth during a time when even the more established clothing retailers have found it tough. The outlook also looks good, with consensus earnings forecasts pointing to a 17% rise in full year earnings, and further rises of 14% and 12% anticipated for FY2018 and FY2019, leaving the shares trading on an undemanding earnings multiple of 13.9.
Huge pipeline
Meanwhile, another mid-cap firm doing rather well at the moment is leading building and civil engineering contractor Kier Group (LSE: KIE). The Bedfordshire-based group has seen its share price advance by more than 50% since last summer after it achieved record levels of revenue and underlying operating profit.
The FTSE 250 group isn’t due to release its half-year results until later this month. But in a recent trading update it indicated that it was experiencing good underlying organic growth, with its Property Division benefitting from continued investment in new schemes and a pipeline in excess of £1bn.
The Residential division continues to benefit from the demand in the UK for all forms of housing, and the Construction and Services divisions are also performing well with total contract awards since mid-November 2016 totalling £1bn. Despite the recent share price surge, I think Kier still represents good value with the P/E ratio falling to 12 next year, and supported by forecast yield of 4.6%.
