When Julian Dunkerton, the co-founder of Superdry, took his seat in a City auditorium on Tuesday morning, he had no idea that he had pulled off one of the most audacious boardroom coups of recent times.
Flanked by an entourage that included his wife – the fashion designer Jade Holland Cooper – and fellow Superdry creator James Holder, the multimillionaire waited anxiously for the outcome of a shareholder vote that, when it came, catapulted him back into the driving seat of the fashion brand he had started 16 years ago.
“We knew it was very close but did not know the outcome until Peter Bamford [the chairman] announced the result of the proxy vote at the start of the meeting,” said Peter Williams, a designer-label-loving fashion-industry veteran who, after last week’s dramatic events, will be Superdry’s new chairman, tasked with rebuilding a board that quit en masse after shareholders narrowly backed his and Dunkerton’s appointments.
In the end, the dogged determination that helped Dunkerton to build Superdry paid off. At the 11th hour his advisers secured crucial votes from City investors Schroders and Investec, and Spanish bank BBVA. “We were knocking on every door and talking to people, and I don’t think management did that,” said Dunkerton. “They didn’t talk about product: they talked about how disruptive I was. In the end, [investors] were swayed by logic.”
On Friday evening, Dunkerton said he was already working hard to turn around the business. “I have loved every second of it. I have had the warmest welcome and the most wonderful three days. It has felt like coming home. I know what I am doing and I know the clear action required to put the business in the right direction. This is what I do for a living.”
What was called Project Lion started last October, after Superdry had issued what would be the first of three profit warnings. Dunkerton, who had walked away the previous March, ostensibly to build a leisure empire including cider-making, pubs and hotels in his native Gloucestershire, surfaced with a warning in a Sunday newspaper that Superdry was on the “completely wrong path”.
At the start of 2018, the company, best known for its brightly coloured hoodies and T-shirts emblazoned with Japanese script, had been riding high. The share price had broken through £20, valuing the company at £1.6bn and Dunkerton’s personal stake at £300m. But that proved to be the high-water mark.
The share price had started to slide before Dunkerton left, but between March and October it more than halved, taking a big chunk of his wealth with it. By Christmas Eve, Dunkerton was roaring from the sidelines after two more profit warnings wiped another 40% off the shares.
The war of words between Dunkerton and the company intensified in the weeks leading up to the vote, gaining momentum when the businessman launched a “Save Superdry” website to present his alternative strategy.
Former Vodafone executive Bamford and chief executive Euan Sutherland, previously of B&Q and the Co-op, maintained a united front until the end. They argued Dunkerton was a big part of the problem and the company, with sales heading for £1bn, was doing the right thing by turning itself into a “global lifestyle brand”, selling more online, tackling new areas like sport and children’s wear, and cutting £50m of costs with 200 job losses.
After the emotionally charged slanging match that preceded it, the shareholder meeting, in an anonymous room at Investec’s City offices, was something of a damp squib.
The board arrived in silence. Only Bamford – who by then knew it was all over – spoke and, even then, without a microphone could hardly be heard. He did not attempt to defend the unravelling company, and with a heroic level of understatement suggested it was “not fruitful” to go over old ground. The meeting was over inside 30 minutes.
The real action would happen in the hours that followed. In a series of frenetic meetings, it became clear that the entire board fully intended to make good on its promise to quit. “Euan’s departure was obvious, but not the non-executives’,” said Williams. “They didn’t need to go and we tried to persuade them to stay until at least the AGM, which is five months away.”
An hour-long emergency board meeting was held, which Sutherland and finance director Ed Barker did not attend. Bamford took the chair, then resigned and left. When Dennis Millard, Superdry’s senior non-executive director, declined to move up to the chair, Williams stepped in.
As the dust settles, 65-year-old Williams – who is no stranger to corporate upheaval after stints at Selfridges, the now-defunct JJB Sports, Asos and Boohoo – is trying to play peacemaker. “I just want to calm everybody down. If you go back to the events of the day, it could have gone either way. After all the heat and drama, I think everyone is ready to quieten down and get on with the job. Most people have got salaries to earn and mortgages to pay.”
The duo needed a simple majority of votes cast to win, and both eked out 51.15%, handing them the narrowest of victories. “The vote being so close is another reason why the whole board should not disappear out the door,” said Williams. “The boardroom is an intelligent place and it’s important to have other opinions expressed there.”
So what happens now? The brand is having a tough time amid a sea-change in shopping habits that is hitting fashion retailers hard. Its sales are falling and in a pre-Christmas profit warning Sutherland said it was on course to make only £55m-£70m this year, down from £97m in 2018.
The gulf between the founders and the incumbents on the Superdry board was obvious to analysts at the meeting, even from the way they were dressed. Dunkerton was in head-to-toe Superdry, his wrist bedecked with expensive-looking woven bracelets, while Holder was clad in a black leather jacket and tight jeans. The directors, however, appeared to have taken their smart-casual style cues from Jeremy Clarkson.
“Within a creative industry you have got to have it running through your veins,” said Dunkerton, gesturing to the space where the board had been sitting. “You could look up there and see that it’s not going to work.”
He said Superdry’s problems had stemmed from the fact it had become a retailer rather than a “brand”, which was a “desperate place to be”. To restore its fashion edge, he plans to lean on Holder’s clothing-design business, which says it can deliver a wave of new products before the key Christmas trading period. The job cuts are being reconsidered. “I don’t want to get into unnecessary cost-cutting,” Dunkerton said. “I am a natural builder, not a cutter.”
Holder, who owns 10% of the firm, will be rehired. “I don’t want to retire and sit on a yacht,” he said. “We’re rag traders. We love product and people and the constant reinvention.”
Dunkerton said the website’s performance could be improved within three to four months, but that it would be a two-year job to turn the whole ship around: “You’ve got to be clear about where you are going. But if you make brilliant product, people will buy it.”
Some question whether Superdry will find future growth a struggle, like other once go-go young-casual brands such as Abercrombie & Fitch and Jack Wills. The millennials who once bought Superdry are now parents, while the might of social media makes it hard for marketers to get a handle on Generation Z.
Holder says it doesn’t matter if older people buy the clothes. “The more dads the better,” he joked, before adding: “People wear Superdry on yachts in San Tropez, and in Cheltenham. It has global appeal.”
Staff at Superdry’s head office – which is in Cheltenham – cheered when Dunkerton gave a pep talk on Wednesday. But the share price suggests investors are not yet convinced. From 577p just before Tuesday’s vote, it has rattled down even further, closing on Friday at 450p – below the 2010 float price.
Sutherland will receive a big pay-off – up to a year’s salary, or £730,000. But investors may not be as lucky. If the previous cost-cutting plans aren’t forced through, there will probably be at least one more big profit warning.
Some insiders are still worried about what the future holds. “Julian thinks he has all the answers,” said one. “For the sake of Superdry, I hope he can pull it off.”
The opposite of edgy
Quilted jackets, sliders, stainless steel water bottles: the current Superdry offering should have placed the brand in prime position to ride the athleisure boom.
Yet despite efforts to diversify away from its classic jackets and hoodies, Superdry has retained a certain student chic, beloved by university sports teams and latterly associated with lad culture. (It perhaps doesn’t help that several of their men’s tracksuit bottoms are dubbed “nu lad joggers”.)
Its prominent branding – which was once central to its appeal – may now be working against it, highlighting the brand’s ubiquity as well as making it a target for counterfeiters. In the world of fast fashion, if everybody’s wearing Superdry, it won’t be long before no one is.
Superdry is the opposite of edgy – it remains too preppy to tap into normcore trends. In terms of the stores, the brand seems to have veered away from luxury destinations, expanding into dying high streets and airport malls – the home of the boredom-buy.
It remains to be seen whether Dunkerton can turn it around. But ditching the “Japanese-inspired” logo – a red flag for authenticity-craving millennials – might be a good place to start.