On the first trading day of 2018, shares in the fashion retailer Superdry hit an all time high of just over £20. The fast-growing chain was brimming with confidence and there didn’t seem to be any major causes for concern. Yet 17 months later, the value of those shares had fallen by more than three-quarters and the company was in a mess.

A rapid run of events wreaked havoc on the business and its shareholders. From a picture of harmony and global ambition it was sucked into a spiralling trading slump. Its founder Julian Dunkerton, left the business and later fought his way back. But by then (and perhaps before) the damage had been done. Superdry’s market cap has fallen from £1.6 billion to just £370 million, and the recovery effort was on.

While all eyes are on whether Mr Dunkerton can re-find former glories and breathe life back into Superdry, there are some interesting observations about what has happened here. For a start, it’s been a case study on the corrosive effects of multiple profit warnings - and why it can pay for investors to get out of these kinds of troubled stocks as early as possible.

It’s also an example of how a stock’s quality, value and momentum interact with each other. In terms of investment profile, Superdry has made a rapid and well defined switch from being a High Flyer to a Contrarian share. Where once it looked like a pricey, fast moving growth stock, now it arguably resembles a value play. So depending on how you see it, there could be reasons to be cheerful about Superdry... even now.

When things go wrong

Ever since its IPO in March 2010, Superdry shares have had mixed reviews.

On one hand, it was touted as a profitable, fast-growing British fashion group with a lot to like as an investment. On the other, naysayers claimed its brand was a busted flush and that its young ‘influencer’ clientele had long gone, even before it floated.

Within a year of floating, the price had soared from 500p to more than 1800p. But that gain was wiped out over the next 12 months as the growth rate slowed and the company hit distribution problems. Then came the first profit warning.

In April 2012 Superdry had to admit that some of its profit forecasts were off the mark.…

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