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Published
Feb 6, 2011
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SuperGroup says franchise buy is a "game changer"

By
Reuters
Published
Feb 6, 2011

LONDON, Feb 4 (Reuters) - SuperGroup (SGP.L), the British company behind the Superdry fashion brand, said a deal worth up to 40 million euros ($55 million) to buy out CNC Collections, its European franchisee, was a "game changer".

SuperGroup

"It opens up huge possibilities for us ... It transforms our prospects in Europe," chief executive Julian Dunkerton told Reuters on Friday.

Shares in SuperGroup, which said it was buying its Benelux and France franchise and distribution partner from owner Luc Clement, were up 4.4 percent to 1,597 pence at 1020 GMT to value the business at about 1.3 billion pounds ($2.1 billion).

Clement will join SuperGroup, whose clothes are a favourite of celebrities such as David Beckham, Leonardo DiCaprio and Zac Efron, as head of European franchising to spearhead a push into Italy, Spain and Germany.

"Luc Clement is delivering spectacular growth and he has really pioneered for us the perfect franchise formula in Europe. By buying his company we capture that growth within our company," said Dunkerton.

"It allows us now to potentially open our own stores in major shopping centres across Europe, we need that hand holding to assist us."

SuperGroup said it expected CNC's sales to exceed 40 million euros and its profit to increase about 8 million in the first year of ownership. Following the deal the group also expected to maintain a net positive cash position.

The company was one of 2010's most successful IPOs, listing at 500 pence in March and hitting a high of 1,660 pence in December.

Analysts said it was significant Clement was taking most of his consideration in SuperGroup shares, reflecting his confidence in the stock.

"Before the upgrades on today's move, the shares are trading on less than 25 times the new year (forecast earnings) and SuperGroup still looks cheap on that basis versus ASOS (ASOS.L)," said Arden Partners analyst Nick Bubb.

SuperGroup is paying Clement 7 million euros cash and 21 million euros, or 1.16 million shares, in stock.

A further payment of 12 million euros in shares is subject to performance over the next three years.

Last month, SuperGroup posted a 90 percent increase in sales in the nine weeks to Jan. 2.

It will update on third-quarter sales on Wednesday.

(Editing by Mark Potter and Dan Lalor) ($1 = 0.7257 euro = 0.6166 pound)

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