Following Superdry co-founder Julian Dunkerton’s reinstatement as non-executive director and the subsequent mass resignation of the Superdry board, Drapers analyses how the entrepreneur will execute his promised brand turnaround.
Dunkerton won his bid for reappointment as a non-executive director of Superdry by just 2.3% of the vote on 2 April, after an acrimonious public battle. As expected, chairman Peter Bamford, chief executive Euan Sutherland, chief financial officer Ed Barker and chairman of the remuneration committee Penny Hughes resigned with immediate effect.
Dennis Millard, Minnow Powell, Sarah Wood and John Smith will stand down as directors with effect from 1 July. Meanwhile, former Boohoo chairman Peter Williams has been appointed as chairman.
As interim CEO, Dunkerton must now accelerate the appointment of a new board to allow him to focus on the product repositioning he has promised, industry experts have told Drapers.
“In the initial stages where there is no CEO, he will have to deal with all the operational oversight of what is now a much larger company, which is going to be very challenging and distract him from the product,” said Peel Hunt retail analyst John Stevenson. ”The plc board has gone but, more concerningly, the retailer board has gone. Julian needs a strong CEO and a strong CFO.
“His skillset has always been about the brand and the product, and he found the operational pressures much harder previously because it pulled him away from the side of the business that he enjoyed. From a shareholder point of view, it’s going to be important that he sets out his views relatively quickly, along with a timeframe for them.”
Williams will be key in securing a strong executive board, said managing director of retail recruitment agency Retail Executives Richard Hollister, who expects the appointments to happen within three months: “Peter has great expertise across the marketing and product side, and the City knows and likes him, as does the industry. He knows a lot of people but the chemistry has got to be right to fit in with Julian’s vision.”
He added: “Julian’s got the opportunity of getting the right exec board in made up of different skills. There should be a good brand marketing person, an international person and an HR person.”
Obtaining the right skills mix may not be Dunkerton’s only challenge.
Candidates may be deterred the head office’s location in Cheltenham, managing director of recruitment firm Aqua Retail Mary Anderson-Ford pointed out: “Far more [relevant] than just selecting the right mix of skillsets and personalities is the location of the head office, as it significantly limits the pool of candidates who would be interested.”
Before the vote, Dunkerton promised he would rebuild the brand’s profitability and restore double-digit percentage margins in two to three years if appointed. His focus will be to reposition the product offering after criticising Sutherland’s decision to expand into childrenswear.
“Having made a lot of very bullish noises about this, he’s going to have to manage people’s expectations as part of a vastly oversupplied market,” retail analyst Richard Hyman told Drapers. “Dunkerton has voiced concerns over Superdry’s 12% margin. However, there are very few retailers that would even allow themselves to dream of having a margin of 12% in the current climate.”
Superdry’s total group revenue for the 13 weeks to 26 January dropped 1.5% year on year to £269.3m, as store and ecommerce sales flagged. The brand blamed “ongoing legacy product issues” for the disappointing results.
In the 26 weeks to 27 October, underlying profits were down 49% to £12.9m.
Stevenson said Dunkerton is already making changes to reposition core product ranges: “Julian has talked about design ideas that he and Williams have already said they would rush through for autumn 19, but the core range needs work. Kidswear will be cut straight away, but there are elements of the autumn collection he’ll be happy with, such as the premium direction of men’s and women’s wear.”
“With the right product, there is no reason that Superdry can’t thrive in a tough market.”
The Drapers Verdict
Julian Dunkerton has a unique opportunity to hand pick a new executive board that supports his vision completely. However, he needs to prioritise this, following his hard-fought reappointment, so that he is able to focus on what he does best: product.
Fulfilling his turnaround promises will be difficult in this retail climate, but as founder of the brand and with the right team to support him, he should now face little disruption in getting to work.