There’s no dispute that this is a bad time for bricks-and-mortar retailers. Lockdowns put the brakes on their business. And this, when they were already facing heat from online retailers. As a result, many have unfortunately gone into administration. Yet, the speciality retailer Superdry (LSE: SDRY) is today’s biggest FTSE 250 gainer. As I write, its share price is up almost 10% from yesterday’s close.
Can the new CEO save the day?
The rise coincides with its personnel-related announcement earlier in the day. Its co-founder and interim CEO, Julian Dunkerton, has now been made permanent. He had exited the business entirely in 2018, while remaining its biggest shareholder.
However, Dunkerton returned to the helm in 2019 after SDRY posted a dismal performance. His term as the interim CEO was until April next year, but going by today’s share price rise, it looks like investors are happy that he’ll be around for longer.
It remains to be seen, however, how long it will take for SDRY to complete its turnaround. 2020 has been particularly bad, and in its recent trading statement the company continued to show a loss. Even though Dunkerton pointed out that e-commerce has played a part in holding up the financials, the fact is that SDRY is still in a financial funk.
What’s next for the SuperDry share price?
At the same time, going by current investor bullishness, the lows to which SDRY’s share price has dropped in 2020, and its newly acquired management stability, all suggest that its share price rise will continue. Its financials may even start improving sooner rather than later, even if it remains in losses for some time.
My assessment of the FTSE 250 stock
But as a long-term investor, I’m still cautious. A new strain of coronavirus has now been found. While there’s nothing to suggest that the vaccine won’t work on it, to me it suggests that precautions will continue, possibly longer than expected. This in turn will impact economic activity further and that includes Superdry.
Moreover, as a consumer, I’ve never been quite convinced of Superdry. Compared to other high-street retailers, neither the styles nor the pricing appeal to me. That is just be one person’s opinion, however, and maybe I’m not its target buyer anyway. But at the same time, when I see its lack of appeal coupled with shaky financials, as an investor I’m doubly unsure of the long-term investing value in the brand.
An alternative to consider
On the contrary, there are other retailers that have managed to perform reasonably well despite the brakes on business. One of them is the FTSE 100 sports retailer, JD Sports Fashion. Incidentally, it’s the biggest gainer in its index today.
This follows news of its acquisition of Shoe Palace, which will increase its footprint in the US, the largest consumer market. I’ve talked about JD’s merits earlier too, and even at its current elevated share price, I still prefer it to SDRY in the retail segment.
