4th Oct 2023 13:00
(Alliance News) - Superdry PLC shares surged 27% to 55.00 pence on Wednesday afternoon in London after the clothing retailer announced that it will establish an intellectual property joint venture in India.
The joint venture will be in collaboration with Reliance Brands Holding UK Ltd, a company that partners with clothing firms and luxury goods sellers.
The Cheltenham, England-headquartered firm explained it will sell its intellectual property assets, including its brand and related trademarks in India, Sri Lanka and Bangladesh to the joint venture vehicle for GBP40.0 million.
Russ Mould, investment director at AJ Bell, said with the deal Superdry has secured itself some "breathing space" and "reignited" its international ambitions.
Superdry will hold a 24% stake in the joint venture, with Reliance Brands holding the remaining 76%.
Mould added that the deal should also provide the firm with an injection of some "much-needed" funds and provide a boost for Superdry's "long-suffering shareholders."
Superdry anticipates gross proceeds of GBP30.4 million from the sale and plans to use the proceeds to improve its balance sheet and liquidity and fund its ongoing working capital requirements as part of its turnaround plan.
Victoria Scholar, head of investment at interactive investor, said the proceeds should help support the company's "struggling" balance sheet while also offering it potential for brand growth in India.
Most importantly for Scholar, the "welcome" development is a boost after a "rocky period" for Superdry which reported last month that it swung to an annual loss.
"Superdry has been dealing with the backdrop of weak consumer spending amid rising interest rates and inflationary pressures as well as a rainy summer which dampened demand for its spring/summer collection. Once a highly successful streetwear brand loved by celebrities and fashionistas alike, Superdry has been struggling to maintain its allure even with the return of Julian Dunkerton as CEO," she said.
In the year ended April 29, Superdry swung to a pretax loss of GBP78.5 million from a GBP17.6 million profit a year prior, as selling and distribution costs grew by 13% to GBP306.6 million. Revenue grew marginally by 2.1% to GBP622.5 million from GBP609.6 million the year before.
By Heather Rydings, Alliance News senior economics reporter
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