Superdry founder stands firm as sales drop 11% in wake of coup
THE founder of Superdry said he intends to stay with the business to steer it through his turnaround plans following a boardroom coup earlier this year as it reported a six-month sales decline.
Julian Dunkerton stood firm as the retailer saw an 11% fall in sales to £369.1 million and swung to a pre-tax loss of £4.2m for the six months to October 26, as he attempts to re-position the business with more fashion-led products and less discounting.
Despite attempts to reassure the City that the turnaround was on track, investors took flight, with shares dropping 4%, down 203p to 479.7p.
Mr Dunkerton said: “My first priority on returning to Superdry was to steady the business and return the culture to the one which drove its original success.
“A key part of that stabilisation process was the refreshing and restructuring of the executive and creative leadership of the business.
“With the board’s backing, I have committed myself to the chief executive role on a permanent basis until
April 2021.
“We have also made a number of internal promotions to the executive team from within our respected ranks of leaders and managers, recognising the commitment and talent that already exists within Superdry.”
He added: “At this halfway point in our financial year, I am pleased with the progress we have made to comprehensively reset Superdry.
“We’re doing this through our product and brand, our physical and digital retail operations and a renewed focus on the retailing basics.
“We are only eight months into a process that will take two to three years, but I have great confidence in the strength of our new executive leadership team.”
Mr Dunkerton earlier staged a boardroom coup to retake control of the business after clashing with previous executives. Euan Sutherland, the Scots former Superdry chief executive who resigned in April, was this week appointed chief executive of Saga.
Mr Dunkerton also admitted that the retail environment remains “very challenging” but was pleased with the results, which were in line with expectations.
The focus away from discounting took its toll on sales, but Superdry insists it remains the right strategy.
In future, Superdry, which has stores across Scotland, will only have three sales events, it added.
As a result, profit margins from sales were up 250 basis points – although this was knocked back due to the weak pound.
Negotiations with landlords are yielding some positive results, with an average reduction of 30% across the first six stores that were under review.
The company is also looking at its wholesale contracts, with the aim to quit any that are unprofitable.
Other areas under review include its franchise operation in China, closing US warehouses, and bringing forward sustainability plans including all cotton used in its products to be organic by 2030.
Mr Dunkerton said: “We are making strong progress in transitioning back to our heritage as a design-led business.
“We are improving the product, with an increasing impact from our re-energised creative teams on the new ranges.”
He said the firm remains on track to increase the new seasonal option count by over 50% and is “adding specifically targeted collections and premium products”.
He added: “Superdry is accelerating its sustainability goals so that they will be achieved in 2030 rather than 2040 as previously planned.”
By that date, all cotton apparel will be organic compared with 10% for 2020, it said. Mr Dunkerton added: “Promotional sales will now only be used for clearance across three specific periods – two end of season sales and Black Friday – while pricing will remain constant on neverout-of-stock and core product until the end of a season.”
Analysts were cautious, but agreed there were signs of improvements.
Retail analysts at Peel Hunt said: “As expected, the numbers make for grim reading, reflecting the legacy position and stock file, although the statement is peppered with examples of product and operational improvements that are expected to form the foundations of more meaningful recovery next year.”
With the board’s backing, I have committed myself to the chief executive role