WHEN investors look back over 2010, they’ll see a graveyard of failed IPOs. Merlin, New Look and Travelport couldn’t even get away; those that did, such as Ocado and Promethean, haven’t lived up to expectations. One of the flotations that stands out from the crowd is Supergroup, which appears to be living up to its boastful brand name. Shares have more than doubled since the firm went public, while sales have done better still.

In its most recent update, covering the period to 1 August, sales grew by 60 per cent. Since then, the trend has accelerated, with sales in the three months to the end of October up by 68 per cent.

Valuing such a fast-growing retailer is tricky, and investors should urge caution where hype is involved. Supergroup currently trades on 23 times calendar earnings in 2011, far more than the wider retail sector (12.6 times). Bulls point out that ASOS trades on over 40 times 2011 earnings, although the online-only retailer has a completely different business model. No one can deny Supergroup’s meteoric rise, but it is already priced in.