Superdry is the latest mainstream fashion brand to come under pressure as it fights to appeal to a younger audience and is faced with implementing harsh cost-cutting measures and potentially closing some of its stores.
New Mobility
The recent results highlighted its difficulties as sales fell 23.5% to £219.8 million in the six months to October 28 and pre-tax losses amounted to £25.3 million. This pushed the share price down to a level that valued the business at less than £20 million. This represents a significant fall from its peak in 2018 when it was valued at an impressive £1.8 billion.
This poses tough questions for Julian Dunkerton who co-founded Superdry in 2003 as a market stall in Cheltenham. Although he built it into one of the most successful names on the UK high street he left the business following disagreements with the CEO who had been appointed when Dunkerton stepped back from running the company. He then forced his way back in through a boardroom coup in 2019.
He has already been on a cost-cutting mission as part of his ongoing turn-around plan – with £40 million of savings expected in the current financial year, ahead of the predicted £35 million – and taken out loan facilities of £80 million from Bantry Capital and a £25 million debt facility from Hilco.
But the recent results suggest more stringent measures are required and the company confirmed it has called in PwC to work on options for the business. These include a restructuring of the organisation and at the heart of this is the extensive Superdry store estate that encompasses 215 outlets of which 96 are located within the UK.
The options include closing underperforming stores and reducing rents through negotiations with landlords. The company has been making efforts to cut rents but a more aggressive approach would be to initiate a CVA.
Superdry stated: “Whilst there is no certainty that any of these options are progressed, they aim to build on the success of the cost-saving initiatives carried out by the company to date and position the business for long-term success.”
The company is suffering from general weakness in the fashion market but it also has the difficult problem of overcoming the legacy of having gone from an ultra-fashionable brand in its early days to one that has fallen out of favour and has an ageing clientele. This has led to challenges in attracting a new, younger audience.
