Superdry PLC (LON:SDRY) has announced plans to take back full control of its brand in China and concentrate on online and wholesale business in the country.
An amicable agreement has been reached with its current local partner Trendy International to exit their existing joint venture, it added.
The joint venture’s 25 owned stores will close by the end of August while the relationships with 41 franchise partners will finish by the end of the year.
Superdry said the move will cost £6mln, of which £3mln was charged at the half-year, and is part of its plan to have the right infrastructure and business models in each of its core markets.
In a statement, Julian Dunkerton, Superdry's chief executive said: “I believe that China represents a huge opportunity for Superdry in the longer term. As the way people are shopping there changes, it makes sense for us to shift our focus to the growth channels of online and wholesale.”
Broker Peel Hunt noted that the JV has been incurring annual losses to Superdry of £3-4m, which will now be eliminated.
"Trading on pre-Covid PER of 5x, the shares are not aggressively valued. Online sales and cash performance have both outperformed expectations over lockdown, with the short-term forecast risk focused on wholesale as we move into the new financial year."
The broker has a target price of 175p. Shares fell 4% to 150p.
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