Is it the right time to buy these 3 apparel retailers’ shares?

Highlights 

• There will be proper paperwork requirements for the free trade of all goods as the grace period between the UK and European Union for goods trade, and customs will end from 1 January 2022.
• As per industry experts, the European companies will take some time to adapt to new changes and additional paperwork leading to delays in delivery in the first few months.

UK residents buying clothing from the European Union are currently subject to import fees despite the free trade deal because of the “rule of origin” requirement. Those companies producing a high proportion of their products domestically are eligible for the free trade deal.

From 1 January 2022, the grace period between the UK and European Union for goods trade and customs will end. As a result, all goods and products will need proper paperwork and proof to qualify for tariff-free entry across the channel under the free trade agreement.

Other than the clothing industry, most industries are eligible for the free trade agreement with European Union. However, the complex supply chains of the clothing industry where most of the products are imported from different continents and assembled in one country deprive the segment of the free trade deal.

As per industry experts, the European companies will take some time to adapt to new changes and additional paperwork leading to delays in delivery in the first few months. Moreover, the companies that have a supply chain outside Europe are expected to pass on the high costs to consumers, with the same clothes price being high on the UK website than domestic ones.

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Let us explore some FTSE listed stocks that deals in apparel and might get impacted:

Boohoo Group Plc (LON: BOO)

FTSE AIM-listed company sells its clothes under various brand names. It has close to 19 million active customers across different countries. The company’s business reported solid growth in nine months to 30 November 2021. The total net sales were £1,482.1 million, up by 16%, driven by exceptional demand. The UK market contributed more than 50% of total net sales at £889.8 million, while the rest of European countries together contributed £158.8 million to net sales.

Boohoo Group Plc currently trades at GBX 123, down by 0.32% on 31 December 2021 at 09:20 am GMT+1, with a market cap of £1,564 million.

Superdry Plc (LON: SDRY)

The company is into sales of men and women clothing and accessories under the Superdry brand in the UK and other European countries. For the 52-weeks ended 24 April 2021, the company reported total revenue of £556.1 million. However, the business reported a statutory loss before tax of £36.7 million, mainly due to lockdown-related restrictions, which led to a temporary closure of its stores.

The retail channel reported a revival upon ease in restrictions in the current financial year, resulting in solid overall performance.

Superdry Plc currently trades at GBX 279.50, down by 2.44% on 31 December 2021 at 09:20 am GMT+1, with a market cap of £235.25 million.

Sosandar Plc (LON:SOS)

The company provides affordable and quality fashion wear for women through eCommerce websites, primarily in the United Kingdom.

For the six months ended 30 September 2021, Sosandar reported higher levels of customer engagement, with a 41% rise in active customer base to 191,000, which resulted in revenue growth of 184% to £12.2 million. The gross profit of the company was £6.9 million.

Sosandar Plc currently trades at GBX 30, up by 3.45% on 31 December 2021 at 09:20 am GMT+1, with a market cap of £64.21 million.