After an intense boardroom battle, which pitted entrepreneurial passion against business acumen, Julian Dunkerton is back at the helm of Superdry. Abandoned by the board, will the brand’s co-founder be able to follow through on his very public promises?
“I’ve got to deliver on everything, but that’s fine,” shrugs Superdry co-founder Julian Dunkerton calmly, referring to his bold promises to turn around the fortunes of the business he originally set up in 2003 and to which he made a dramatic return last month.
Dunkerton – or Juls, as Superdry’s 731 members of headquarters staff address him – is back at the company’s base in Cheltenham. After being allegedly sidelined from the boardroom, the entrepreneur abandoned his directorial post last March.
By the following October, Superdry warned that profits would take a £10m hit for the full financial year – in reality they dropped by nearly £13m.
At this first indication of trouble, Dunkerton, still Superdry’s largest shareholder with an 18.4% stake, jumped into action. He organised investors to back his return and rallied the press to voice his concerns about the current management.
Superdry’s total group revenue dropped 1.5% year on year to £269.3m for the 13 weeks to 26 January, and the existing board blamed “ongoing legacy product issues” for its poor financial performance as sales waned both in store and online.
The battle for power played out on the pages of every newspaper in the UK and, to the shock of many industry experts, entrepreneurial passion turned out to be the victor.
Last month Dunkerton was re-appointed as interim CEO after winning a slim majority of 51.15% in a shareholder vote on his return. Throughout his campaign he laid out clear plans to cut back discounting and “re-angle” the product to focus on bestselling categories such as outerwear, while cutting back on others.
Speaking just over two weeks into his role, he remains confident that he can deliver on his bold promises to produce visible results on the business’s balance sheet within just four months and, in the longer term, return the business to profitability with double-digit percentage margins in two to three years.
His ability to do so is reliant on his passion for the business, says retail veteran Sue Dunn, previously director of concessions at House of Fraser for over 16 years.
“Any brand needs to have people in charge who really feel passionately,” she says. “It’s very difficult to underestimate the power of someone who is really passionate. The feeling about [former CEO Euan Sutherland, who left when Dunkerton returned] is that maybe he didn’t feel that about Superdry – he was just ticking all the boxes.”
Dunkerton founded Superdry in 2003 with James Holder, who now serves as a consultant for the brand. With humble beginnings in Cheltenham, the brand is now internationally recognised by its Osaka-inspired logo which, emblazoned across hoodies and signature graphic T-shirts, causes some consumers to mistake its origin as Japanese.
“The curious thing about us is that our place in the marketplace is unique,” says Dunkerton. “We forgot that for a while and I’m very much reinstating it. We’re a brand that you are prepared to wear the branding on the outside of the clothes because you believe in the product.”
Despite losing its way over recent years, Dunkerton plans to reassert Superdry as a heavyweight of the British high street and is first looking to “stabilise the ship” after the departure of the existing board following the shareholder vote that reinstated him. Chief executive Sutherland, chairman Peter Bamford, chief financial officer Ed Barker and chairman of the remuneration committee Penny Hughes resigned with immediate effect, while Dennis Millard, Minnow Powell, Sarah Wood and John Smith will exit on 1 July.
“The board structure was effective, but I’ll be expanding the exec,” Dunkerton tells Drapers. “It was fairly shrunken, and we’ll be making sure that everyone is speaking for their own departments – a very important part of where we’re going.”
Dunkerton currently has the support of Peter Williams, former Boohoo Group chairman and former Selfridges chief executive, who was also appointed as non-executive director in the shareholder vote in April.
“There’s a multitude of priorities but the first thing is to make sure that we have a happy, positive team here,” says Dunkerton. “Structurally we’re pretty good but what has happened is that people have been thinking in silos. I think of one business, and we need to make sure we’re all working together.”
“What Julian brings is that he genuinely, passionately cares,” says former Superdry chief financial officer Shaun Wills, who left the company in 2015 and is now finance director for clothing and home at Marks & Spencer. “He galvanises people with a common belief and brings great energy and direction, but he needs the right people around him to make sure he can do that. There’s a picture painted of him as being outdated, but he’s really good at watching what’s going on and changing his views accordingly.”
Work to be done
The slight disarray Drapers discovers at Superdry HQ hints at the product-focused work Dunkerton has already commenced: rails of outerwear stand outside our meeting room, having just been approved by Dunkerton for the upcoming collection.
However, as the City awaits more detail with bated breath, Dunkerton is careful to keep his cards close to his chest.
“We’re actively working on the product,” he says, dressed head to toe in Superdry apart from a pair of Converse sneakers. “I’ve gone through all the products that are coming through from now until December and am looking at the gaps so that we can overlay what is missing: in particular the short lead-time products.”
Dunkerton adds that Superdry will be entering new categories – but will not reveal what they are. As he promised, plans for Superdry kidswear have been scrapped and a potential licensing deal with Pentland Brands, which was part of Euan Sutherland’s plans to revive the business, has been withdrawn.
“What we’re trying to do is build up this range of core, classic products that really resonate with the consumer and look different from anything you can get on the high street,” he says.
We haven’t been taking advantage of influencers, which is a kind of madness
Historically, Superdry’s key consumer has been 15-to-24-year olds, but Dunkerton wants to cast the net wider to negate any risk of underperformance: “What’s happened is a sort of pushing it towards a single demographic, and actually I want to broaden that,” he explains. He aims to create a different brand language for each age group, and believes this promotes brand health, as a wider consumer base makes the business less reliant on any one segment.
“You can really build the business in a very, very powerful way by understanding that,” he says. “We’re one of the only companies in the world with the amount of graphic and brand language to allow us to appeal to all these consumers. To not take advantage of that is madness. Look at the potential of the brand once you start understanding all those demographics in a very serious way.”
In Dunkerton’s absence, Superdry’s online sales growth dipped into negative territory, and recorded a 0.7% decline to £69m for the 13 weeks to 26 January 2019. Online sales currently account for 30% of group revenue and Dunkerton plans to grow this as much as possible.
“We haven’t been engaging on social,” he says. “I think we’ve paid lip service to having done it. We haven’t been taking advantage of influencers [either], which is a kind of madness.”
Superdry’s Instagram account has 434,000 followers: its most recent post at the time of writing gained just over 1,000 likes. Compare that with competitor Hollister, which has 4.5 million Instagram followers and 64,000 likes on its most recent post, and it is clear to see the opportunity facing Superdry – and the size of the hurdle.
And although digital income has taken a hit, that is not to say that stores are picking up the slack: for the 13 weeks to 26 January, store revenue declined by 8.5% to £126.8m.
This is where Dunkerton is confident he can make a big difference: “Everything that needs to be done with the store experience is very much my skills base. I’ve been doing that all my life. I will be getting my hands dirty in UK stores for sure.”
Superdry currently has 105 own retail and franchise stores in the UK and, at a time when retailer and landlord relationships are strained, Dunkerton hopes to work with landlords to rebuild Superdry’s high street prominence.
“I very much see landlords as partners,” he says. “You get one store perfect and it has a global resonance. We’ve forgotten that. You can’t just expect customers to come through your door – you have to make them want to come in.”
With 622 stores internationally, including locations in Australia, Hong Kong and South Africa, landlord relationships are also an important part of Dunkerton’s initial global strategy, which will involve continued European expansion, global digital growth and improving store design across the 58 countries in which it has a bricks-and-mortar presence.
“We want to bring the love back to the retail stores across the globe,” he says. “This isn’t an internet-only story: this is about stabilising the stores and pushing them back into growth. I respect landlords and hopefully we can work together to really rebuild everything and move forward in a positive way.”
Each strategy will be different depending on location, but Dunkerton pinpoints the US and China as territories where “the opportunities are vast”.
In terms of wholesale, Superdry currently has 3,700 stockists internationally and 360 in the UK, accounting for almost half of group revenues. Wholesale prices for the current collection range from £4.17 for a pair of trainer socks to £125 for a waterproof parka.
The issue is that he’s set out the framework as opposed to the detail
John Stevenson, Peel Hunt
Another of Dunkerton’s focal points for expansion is increasing the product available to wholesale partners.
“For the most part, most of our partners are probably delighted that I’m back,” he says. “Because [my plans] focus on all the things that they want focused in on: product, experience and reduction in Sale activity.”
Dunkerton’s confidence in his unique understanding of the business and his strategy is surprisingly humble. Where others blame the difficult retail climate for poor performance, he shoulders the blame on behalf of Superdry, accepting that “any mistake that this company has made has been self-inflicted because, in reality, the market is there”.
Demonstrating his commitment to Superdry, Dunkerton has pledged to not sell his remaining 18.4% stake in the business for at least two years. However, for now, the industry is still in the dark on the details of his master plan.
“The issue is that he’s set out the framework as opposed to the detail,” says Peel Hunt analyst John Stevenson, who is dubious about the promised speed of Dunkerton’s turnaround plan. “The process of turning around a clothing business takes a long time and, in the short term, we’re starting to get a little concerned about the numbers. Will the business be able to turn around by January or even November?
But Dunkerton is not fazed: “If you make great product – people want it. At the end of the day that is the key to life. You see somebody wearing something amazing – you want it. That never changes.”