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"The corporates have lost and fashion has won." The industry reacts to Dunkerton's return to Superdry

Lauretta Roberts
03 April 2019

As victories go, it couldn't have been tighter (he won by just .15% of the votes) and yet in so many senses it couldn't have been greater. Julian Dunkerton was yesterday triumphantly returned to the board of Superdry, the company he founded 15 years ago, after a noisy and highly organised campaign to get shareholders to back his return.

Dunkerton stood down from Superdry a year ago claiming he was planning to spend more time on his charitable pursuits and other business interests. At the time things seemed to be going OK at Superdry, so his departure wasn't deemed desperately controversial, though it was something of a surprise.

But then the profits warnings began... Last autumn the brand said it had been hit by unseasonably warm weather and its reliance on outwear had been a problem (for which it later blamed Dunkerton, saying he signed off AW18 lines, though Dunkerton refuted this saying he had been "frozen out" of design meetings). By December, how much of a problem became clear as the business revealed profits down by 49% to £12.9m in the six months to the end of October.

Superdry SuperGroup

Superdry Regent Street flagship

The CEO, until yesterday, Euan Sutherland said at the time a new strategy was being implemented to reduce product lines and launch kids wear. But Dunkerton had already broken cover by this point and had announced he was going to attempt to convince shareholders that only he knew how to fix the problems at the company (and it wasn't by cutting back lines and trying to appeal to kids). He argued he should be re-instated to the board at a senior level and took every opportunity in the media to say so.

Superdry's board dismissed Dunkerton, and (in what now seems like an arrogant assumption) said they didn't believe any institutional shareholders were engaging with the entrepreneur.

Eventually Dunkerton (who still owns 18% of the company), with the backing of his co-founder James Holder (who owns 11%), requisitioned am EGM to force a vote on his return and the installation of former Boohoo chairman Peter Williams to the board as well. Before the meeting took place proxy voting indicated that Dunkerton had won by convincing Investec, Schroders and BBPA to back him, giving him just enough votes. Despite the fact that 75% of its independent shareholders opposed the move, Dunkerton had won and the margin by which became irrelevant.

As anticipated, the entire Superdry board walked out leaving Dunkerton in the CEO seat on a temporary basis (he has been clear he doesn't want that job permanently) and Williams became chair, replacing Peter Bamford.

So, as well as carrying out his new product strategy (sourcing more product from Turkey, as opposed to the Far East for instance), Dunkerton has to find a board and get a team in place to help him realise his vision.

Can he do it? Even for someone with such obvious talent and passion, it's a big ask (for some the brand has simply run its course). And before his achievement is committed to the annals of fashion folklore as one of the great victories of the fashion expert versus the City, we'll have to wait to see the results.

The City seems to be punishing Dunkerton for showing them up in the short term, as the company's shares plunged nearly 9% yesterday and are down a further near 8% today, but will fashion win out? We ask industry experts for their view...

The Analysts

"History shows that 'going back' generally ends badly. However, there are a few exceptions. Superdry is essentially a retailer of basics at very high prices. Its very strong branding supported those very high prices until relatively recently. The problem with a model like that is it leaves you with no wriggle room. So if your cache dips a little, you look really uncompetitive. Branding is ephemeral by definition. So in a chronically oversupplied market, Superdry was vulnerable.

"Will Dunkerton be able to turn it around? If the question is: will he be able to take it back to where it was? Probably not. Will he improve the product? Probably yes, although it’s hard to really know how detached he is for responsibility for the product in recent times. What we can say for sure is the apparel market will remain really tough for some years. The massive oversupply will take time to rebalance. The company probably needs to manage its own expectations and those of the market. Getting back to margins of 19% is not going to happen!!"

Richard Hyman, leading industry analyst and founder of consultancy, Richardtalksretail.

"Superdry is heavily branded and has been overly ubiquitous - meaning the brand has suffered from over-exposure. So it’s at this juncture typically when a passionate founder might return to reinvent the brand. A founder is at least as well placed as anyone else to take on the tricky task of brand rejuvenation in today’s challenging retail environment.

"He obviously cares desperately about Superdry. The question is, will his passion be enough, and will he be able to take a senior team (obviously not the current team) with him?"

Kate Ancketill, CEO, GDR Creative Intelligence.

The Fashion Experts

“We’ve stocked the brand for the last two years and it’s been great for us, so I’d like to think him coming back on board could signal even better times ahead. After all, he was there originally when it really was the must-have brand.”

“From what I gather, what Julian wants to bring back is it being more of a jacket and sweatshirt brand that it was so known for, instead of diversifying too much.”

Daniel Ringer, director and menswear buyer, Standout

“We were going to stock Superdry a while ago but it didn’t materialise. I think everyone, as an independent retailer who stocks Superdry, will be very happy to see him come back. He had a very strong ethos as to what Superdry was about, and it was mainly outerwear and hoodies. A navy blue plain poplin shirt with Superdry written on it is not going to sell. It’s not what the brand is about.”

“Even under his previous reign, he didn’t make everything a success. The tailoring was a bit far fetched for example, and I think people recognised that. But, what they did do is stick to their core beliefs and strengths. If you look at other brands in the market they were competing against, like Jack Wills and Hollister, they are having bigger problems than Superdry.”

It’s about the hoodies and the destroyed washes, and jackets with loads of zips. That was their area and their look, and that was what he worked on very well. And, they retailed very well, in university towns especially. Middle England loved it. It was the kind of shop where the son and the parent could buy an outfit and they’d be happy wearing it.

“So, I think people are now going to be very happy that the corporates have lost and fashion has won."

Kashif Qazi, owner, Utter Nutter, Romford

Additional reporting: Tom Bottomley

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