May 11, 2017 / 8:52 AM / 2 months ago

REFILE-UPDATE 1-UK's SuperGroup gets sales boost from weaker pound

3 Min Read

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* Currency gains help to boost revenues

* Shares slip as analysts focus on declining margins

* Clothing sector also faces pressure from rising inflation

LONDON, May 11 (Reuters) - SuperGroup, the British company behind the Superdry fashion brand, reported a 27 percent rise in annual revenue and said it would meet profit forecasts, helped by its overseas expansion and a weaker pound.

The firm, whose trademark jackets, hooded tops and jogging bottoms are popular with teenagers and twenty-somethings, said on Thursday currency changes accounted for about one third of the revenue growth in both its retail and wholesale operations.

Shares in the company, which have increased 31 percent over the last year, fell almost 7 percent on Thursday on the lack of a profit upgrade and declining margins. There are also broader concerns about the UK clothing sector as disposable income is squeezed by rising inflation.

"Strong top line growth across retail and wholesale is offset by gross margins that are lower than expected and revenue growth has benefited materially from forex," said Liberum analyst Adam Tomlinson, who downgraded his recommendation to "hold" from "buy".

The pound has fallen about 12 percent against the U.S. dollar since Britain's vote to leave the European Union last June.

SuperGroup benefits from that decline because over half of its revenue is generated outside the UK. On the other hand, it does face higher sourcing costs as about half of the goods it imports are paid for in dollars.

It operates in 62 countries, including the U.S. and China, through 863 stores and concessions. It also has an e-commerce business with 27 international websites.

Revenue increased to 750.6 million pounds ($971.1 million) in the year to April 29. Retail sales rose 20.6 percent, while wholesale revenue jumped 42.9 percent, with the firm also benefiting from better product ranges, the introduction of new categories and improved infrastructure.

However, gross margin was forecast to fall on a full year basis by 120 to 140 basis points, reflecting the impact of higher sourcing costs and the strength of wholesale, which has a lower margin than retail.

The group forecast a 2016-17 underling pretax profit of 86-87 million pounds, in line with analysts' forecasts and up from the 73.5 million pounds made in 2015-16.

"We remain confident in the continued delivery of sustainable revenue and profit growth," said Chief Executive Euan Sutherland.

The stock was down 112 pence at 1,539 pence at 0845 GMT, valuing the business at 1.25 billion pounds. ($1 = 0.7729 pounds) (Reporting by James Davey; editing by Keith Weir)

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