SGP- pile of junk?

SGP is a fashion retailer:

It focuses on the youth fashion market with its clothing and accessories for both men and women.

It is – or should I say was – considered a high-growth share.

It was floated in March 2010, and reached a high of around 1773p in Feb 2011. It plummeted 38% in today’s trading on account of:

There have been arithmetic errors in our forecast of the Wholesale business amounting to some £2.5m

This is a far cry from news on 12-Jan-2011:

Reuters reported that Supergroup PLC forecast fiscal 2011 profit at the upper end of expectations after posting a 90% increase in sales over the key Christmas period.

As Bloomberg noted today:

[SGP] fell the most ever in London trading after the owner of the Superdry brand lowered profit guidance for a third time in about six months

This is either a very good investment opportunity, or a complete value trap. The problem is, there seems to be a bit of a pattern here with new issues. CPP was a similarly disasterous investment, and was even suspended for awhile.

Although the "arithmetic error" was "only" £2.5m, one can’t help but wonder if there’s something much more worrying going on. Mr Market certainly seems to think so. He might be acting irrationally, but then, that’s only a might. I’d be very, very, careful with this one.

Will be interesting to see how it all pans out. My guess: avoid.


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About mcturra2000

Computer programmer living in Scotland.
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