Superdry PLC (LSE:SDRY) has been downgraded by Royal Bank of Canada (TSX:RY) (RBC) to “sector perform” but increased its target price by 5p to 160p after a strong run for its shares.
“Superdry has made a good start to its turnaround strategy, with a better product offering and improving social media metrics,” RBC said, though it warns the fashion retailer’s improvements have been slower than expected.
RBC believes digital impact, an area where Superdry “lagged”, is a key target and the business has tried to improve through better online customer experience.
“It has now onboarded all of its websites onto its new microservices platform, but we think that it has been facing some challenges in getting this fully operational.” said the bank’s analysts.
Superdry has been able to improve its social media presence- working with more than two thousand influencers and growing followers on Instagram and TikTok.
“Superdry has faced challenges in maintaining brand relevance with the younger consumer,” said RBC, which believes the retailer's actions and improved products “are helping to drive greater traction.”
The Toronto-based bank also thinks Superdry’s “strong focus” on sustainability provides an edge over rivals, but the challenge remains as to how it can relay this position to consumers.
The Cheltenham-based company, which sources 75% of its products from Asia, may also face setbacks from “the relatively stronger US dollar”.
Superdry is currently trading at 143p after rising 41% in the last month.