Sunday share tips: Supergroup, Rank, Venture Life
SuperGroup is a share to 'avoid', said the Sunday Times' Inside the City column, even though this week's results should show another strong quarter. The Japanese-styled youth fashion brand with its Superdry logo has grown impressively since being founded in 1985 to over 700 stores now. Boss Euan Sutherland took over with a mission to take the brand upmarket and into sportswear, shoes and accessories and more than half of revenues coming from abroad.
However, one of the UK's largest clothes retailers, Next, issued a profit warning this month and highlighting the economic constrictions on consumer spending as inflation is pushed up by the pound's slump, diverting shopping budgets from clothes and towards experiences. Inflation on its clothes is likely to soon feed through to shop prices. As a youth brand, the focus on older customers is a risky strategy. "Which self-respecting teenager wants to be seen wearing the same brand as his dad?"
Shares in Venture Life Group are "worth a punt" said Midas in the Mail on Sunday, which since floating on AIM have almost halved to below 60p. The company develops, acquires and manufactures 'wellness' products, mostly focused on people aged over 40, selling its products via distributors and sometimes direct to retailers, as it does in the UK. An example is luxury skincare range, Lubatti, originally devised by Madame Lubatti, a well-known London homeopath who in the 1920s is thought to have created bespoke face creams for a variety of filmstars. The company acquired the secret recipes, created a commercial range and launched it in China, where wealthy consumers are keen to buy skincare goods made in Europe, rather than on their home turf.
Venture Life has also developed capsules and sachets containing cholesterol-lowering ingredients that are available in Benecol-branded food products such as yogurt and spreads. NeuroAge, a range of memory and brain supplements that have been clinically proven to improve cognitive function, was developed from scratch and is on sale in Canada, Germany and other parts of Europe. Its biggest UK brand is UltraDex, a medicated mouthwash and toothpaste range proven to remove bad breath for 12 hours. Last year's pre-tax loss of £1.1m is expected to reverse to a £500,000 profit, more than tripling to £1.6m in 2018.
Rank is a 'hold' for Questor in the Sunday Telegraph, with the casino owner likely to benefit from government plans to assimilate most of the UK's casinos under a single legislative umbrella. The government’s review of the gaming industry, which has been delayed by the election, is expected to derail what is seen as an epidemic of fixed-odds betting terminals in bookmaker's shops. Casinos are seen as offering closer supervision of slot machine gamblers than bookmakers and so could quadruple the number of machines per site from 20 to 80.
Rank's Grosvenor arm saw profits fall 16% in the six months to the end of December, while its Mecca bingo arm saw profit drop 7%. Questor conceded it would be a gamble to invest ahead of a regulatory shake-up but major changes are certainly ahead. "Tougher rules and smaller profits will herald a new round of consolidation in the sector."
Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only and not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.