Superdry feels the heat long after summer slump
And now departed co-founder Julian Dunkerton is kicking up a stink as poor results loom, writes Shane Hickey
There is at least someone looking forward to winter. The management at Superdry, the retailer that has become synonymous with multiple zips and Japanese characters, blamed the warm weather this summer for its muted financial performance as people became hesitant to spend on new, snug jackets while the sun continued to shine.
This week the company announces interim results, having already issued a profit warning that prompted a drop in the price of shares in October. Last month it said that while winter had come to some markets, there had been no “sustained period of seasonally typical weather”. Meanwhile, Julian Dunkerton, one of the company’s founders, has emerged from the wings to make it known that he thinks things are going in the wrong direction and that he should be brought back into the fold, having resigned from the board in May to look after his other interests.
Not a man short of self-confidence, he has declared himself “probably the most experienced human being in this industry in this country as we know it”, and has met the company’s chairman, Peter Bamford, as well as institutional investors in an effort to return in some capacity.
Superdry has warned that winter has not come soon enough for it this year. Sweatshirts and jackets account for 45% of its annual sales, so warm weather in the UK, on the east coast of the US and in continental Europe has been a problem. In order to reduce the reliance on outerwear, the company is trying to sell more dresses, skirts, women’s tops and denim, as well as tapping into the athleisure trend by opening a handful of stores that only sell sportswear.
In addition to the weather, the company said difficult conditions on British high streets would reduce profits to the end of April 2019 by £10m. It also warned that its hedging against currency movements had not worked out as expected, leading to £8m in additional costs.
All this has led to frustration from Dunkerton, reported to hold about 18% of the company’s shares, who has said Superdry is suffering from a “serious lack of knowledge”. “I’m not going to go away, there’s too much at stake,” he has said.
He created the brand with the designer James Holder in Cheltenham 15 years ago. It shot to prominence when David Beckham wore one of its “Osaka 6” logo T-shirts on the cover of his 2005 calendar.
Analysts say that the problems with the weather mean that the company must now work hard to generate revenues from its core market of jackets and sweats through the current peak trading time. Others believe there could be more problems beyond the weather, however.
Emily Salter, a retail analyst at GlobalData, says that although the heatwave has been blamed for Superdry’s poor performance, “its growth has been slowing year-onyear, signalling a longer-term issue beyond these factors.
“The retailer’s prices are at the higher end of the mid-market, which may alienate many potential customers, especially as many trend-led clothing retailers now sell athleisure and sports clothing at lower prices, including H&M, Asos and Topshop.”
This will be a busy week for Dunkerton. He will also be focused on Westminster on Tuesday, when the vote on Theresa May’s Brexit deal is scheduled. In August, Dunkerton gave £1m to the People’s Vote campaign, which is calling for a referendum on the final Brexit deal, and has said that if the UK had left the EU 20 years earlier his brand would never have been a success.
Dunkerton has emerged from the wings to make it known he thinks things are going in the wrong direction
Dunkerton says he is ‘probably the most experienced human being in this industry in this country as we know it.’