Superdry PLC (LON:SDRY) shares tumbled after one of its founders sold a 6.7% stake in the fashion retailer.
Julian Dunkerton, co-founder and former chief executive, offloaded 5.5mln shares at 1,285p each, raising an estimated £71mln.
He still owns 15.1mln shares, representing around 18.5% of the company.
The share sale comes after Dunkerton announced in March that he was stepping down from the board by the end of the month to “devote more time to his other business and charitable interests”.
Liberum downgrades Superdry
Liberum said Dunkerton’s decision to sell the stake was “not wholly a surprise” considering his departure but it also potentially raises the question of what he thinks about the value of the current share price.
The broker downgraded the stock to a ‘hold’ rating from ‘buy’ and left its target price at 1,400p.
It noted that the price the shares were sold at represented a 6% discount to last night’s close. Liberum added that the share sale followed a “rapid rise in the shares the past month, on little to no news”.
“Recent results (the fiscal year 2018) contained little new information and there was no change to FY19 profit and loss guidance,” Liberum said.
The broker said it saw good value in the shares at the time of the preliminary results earlier this month but this window has now passed, adding that earnings momentum has slowed and there are greater risks without Dunkerton to lead the brand.
READ: Superdry announces special dividend as it bucks the trend with strong sales and profits
To turn more positive on the stock, Liberum said it needs to see earnings momentum pick up, a brand vision from a new leader and improved margins.
In morning trading, shares were down 6.7% to 1,273p.