Betting on Dunkerton

It was a big day on Monday for fashion specialist SuperGroup when the City’s scribblers descended on Cheltenham for a bit of speed-dating with the management.

SuperGroup quickly became a stock market darling after its IPO last year, but investors have since been falling out of love with the retailer, concerned about moderating sales growth and the continued appeal of its flagship Superdry brand.

The shares fell after the analysts’ visit but are rose over the week, showing that SuperGroup remains in the stock market equivalent of a Relate counselling room.

SuperGroup is partly a victim of its own success.

During a dearth of IPOs and on the back of its obvious strengths, investors swooped on shares at flotation and subsequently turned it into a bit of a bubble stock. So upsets, such as sales growth of ‘only’ 39%, have been particularly harshly punished.

Aside from its fashion appeal, which it undoubtedly retains at the moment, SuperGroup has one thing going for it - its management. Founder Julian Dunkerton and his team own 64% of the shares so have a direct interest in ensuring continued growth.

He’s seen as arrogant by some but his umbilical link to SuperGroup means that for Dunkerton success is not just business, it’s personal. A spiky sort, he has a touch of the Philip Green or Stephen Marks about him, a confidence in his abilities and ambition to prove his doubters wrong.

Of course the business lows, rather than the highs, of Marks’s French Connection, which took blood and treasure to rectify, are what investors fear being replicated at SuperGroup.

They must judge SuperGroup’s future prospects rather than historic performance as they consider whether to buy, hold or sell. They will also have to make a judgment call on Dunkerton and his team. But anybody who can move from a market stall to Regent Street has something going for him.