The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
I have visited well over a dozen stores now. Quite a few repeat visits, some in high streets, some in centres. All look pretty slow on the customers front, and very heavy on stock levels...and on discounting.
I fear that any sales they are making, will be at the 50% off level. Not good for margin.
I honestly don’t know which way SP is going to go. Not confident the report will light any fires under it, but you never know, except some people do, of course.
Yes! I remember when this was over £20. Of course, some posters would say ‘£50 by Xmas!’ Same s*** , different day.
I like the idea of a ‘disruptor’ investor. I think it’s exactly what is needed, although I don’t know how much disruption they can cause at 3.37 %.
JD, IMO, has got bogged down into repeating himself (me too, before any one else says so), and is not making the necessary changes that the brand needs. I wonder how much the Chairman was involved in talking round this investor? He saw the need for change, but couldn’t convince JD at that time. The delayed results may yet bring a stinging reality check. Perhaps that’s where the chair and a disruptor can start having a positive influence.
Sdry has always been, IMO, very good quality. It’s a good thing to be, but it won’t sell clothes on that aspect alone. I used to wear sdry, no longer. My son has balked at the idea for years now. This is the problem. Like FCUK, or GAP, a lot of people just don’t want this moniker splashed across their clothes.
Can anyone truthfully say that they can see how the brand has developed over the last 3 years from a product perspective? It was stagnant under Sutherland, even despite JD still being present for the most part, but I hoped that JD would reinvigorate, reinvent, recruit. Sadly, I just don’t see it. Yet.
Built for mass or 'class'? Not sure I see the relevance. If its not selling, it doesn't matter who your target customer is. JD and Holder were always about it being 'cool'. It's certainly not that anymore. Compounding the issue is the number of stores that were opened in Sutherland's clamour for revenue, in awful locations. Buttermarket in Ipswich does not say 'class', to me.
Hopefully the delayed results will announce amazing news. It could happen, and I'd be perfectly happy, but I can't honestly see it.
Sadly, I do follow Jade on insta. ;-). More to look at the cars and watches...
An accelerating shift in online is definitely positive, but vague. Numbers? The language used is always canted to sound like things are going well. Its like estate agent speak. Look at all the "encourage by" references to China and US business made along the way.
SDRY business online has always been weak in comparison to the size of the business. Like I said before, that it is better than it was is hardly the point for celebration yet. Compared to other brands, the penetration is low. Reasons could be poor execution...I'll go along with that (and same for stores in my opinion), its never been the best at online, again there are historical reasons for that surrounding talent. It could be lack of womenswear in the overall mix (yes, its gone up as a ratio to mens, but is that the same as saying the womenswear product is flying?). A small increase in online sales, propelled by large increase (in ratio) in womenswear might point to a drop off in mens sales online... Will the womenswear store sales show similar levels? Or, as I feel, the physical store sales will still be men in the main, with womenswear somewhat lagging behind, which, in turn, points to the earlier point about dads not buying clothes online at the same rate as other groups (teens and women to take a simple line). Anyway, mountains of data supports the way people shop online, its not guesswork.
I don't have a lot of hope left here. I've visited about a dozen SDRY stores since the reopening. Whilst I saw queues at some retailers, Zara for example, I saw no such activity at SDRY. Even today, my local SDRY was deserted. It's anecdotal, of course, but there you go. The stores looked way too full of stock, a JD trait when he's allowed to run free. Social distancing is out the window as the shop floor is like a maze. Standards looked good, though, although I suspect that it's more to lack of being shopped than any other reason. The sales were pretty rotten before lockdown, I see no evidence that that will have changed. An uptick in online from a low base, is nothing to get excited about. In fact, unhelpfully, the typical SDRY customer is not the prime user of online clothes buying. SDRY has, arguably, become a "dad brand', and males of certain age aren't the best online customers of an offering such as SDRY. If they appealed to teenagers it would be a different story, and the same goes for women, who really aren't a big part of SDRY's business.
That it would take time, that there would be bumps is a given. China was a failure, spin it any way you like, but having to withdraw shows a failed strategy, despite the self congratulatory claims made by then CEO, Sutherland. SDRY retook control of their brand in USA some years ago with a price just shy of 30million. So what has happened there? How much profit are they making? I'd call it a fail. Who was running the US for them? Anyone with relevant experience? Judging by some locations they went into, I'd say not. Who is running retail now that Tesco's bakery guy has gone? Someone from Wilko. International experience? I think not. How has the product offering changed? Not enough, barely at all in my eyes. Why would you go to SDRY now? Nothings changed. Nothing I have seen suggests there's going to be any major shift in their approach, so why are the sales suddenly going to increase? I can't see where good news can come from. Thats probably why the price is low. I sense there is a feeling that the brand has had its day. Holder selling, Standard life selling. Holder is legally distinct from SDRY, but to say he has nothing to do with them is a stretch.
I wanted Sutherland out. He did well for himself, but not for SDRY. I don't suppose he cares. I wanted JD to take control. But I wanted JD to bring in talent, at almost any cost, to fix this. I think everybody knows that the new Chairman wanted new talent too, but he couldn't convince JD. Don't forget JD brought in Sutherland, as JD is not a CEO type. He likes his area, but not much else. The Nike football guy has been at SDRY for long enough to show what he's bringing to the table. What is it? Tell me what product is his? Where's the direction, or is it just all the exact same as before? Looks to me like it's still "Superdry" splashed everywhere it can be.
I just can't see what the new story is that will take this brand forward.
Future. I wrote my posts. I don’t need to read them again. On the contrary, you should read them.
If you’re correct, I shorted sdry 2 years ago at £14. I must be rolling in it, no?
I have an intimate knowledge of this company, I post my observations. By all means, trawl through them and point out the factual falsehoods. Go right back into the far distance and find where I predicted that Sutherland and his team of greengrocers were going to cause the downfall.
This is a discussion forum, it’s not exclusive to people making grandiose statements like ‘£10 by Xmas’. Seen it all before. I think you will find that I make the least sensational predictions of anyone.
Lastly, if you honestly think that posting opinions on here will move the share price in any meaningful way, you are delusional.
Best of luck
Futuretruth. Never ever been short on any stock. Always have been in and out of SDRY since it floated. If your feelings are hurt by what I said, investing probably isn’t for you. I’m looking for one statement of merit in your post.
Is the video of Euan Sutherland talking about China expansion still on the website? The one where he talks about how humble SDRY approach to partnering in China was, and how they were doing it the right way? He then added, rather I humbly, that if there weren’t 500 SDRY stores in China, he’d be disappointed. Dear God.
I’m long here, caught with my pants down. It’s a long time since I saw this as anything other than a trading opportunity. I still don’t see where they’re going. The increase in online activity was a given, but went from being poor, to a bit better than poor. Other fashion retailers (not Primark, obvs) saw amazing numbers in this respect.
Been down my local shopping centre. Huge queue for Zara, nobody at all for SDRY. Seriously.
If their international expansion hits buffers...I don’t see how they’ll survive, let alone get back to £5.
JD has a lot on his plate, what with all his businesses on top of SDRY. His young Mrs is also now pregnant. Congratulations of course. Sleepless nights?
I see no good news here.
Whilst there remains a lack of new talent, the overseas business remains somewhat underdeveloped and seemingly rudderless. I hear that a new man in retail has started, most recently having worked at Wilko....I’m saying nothing more on that.
The next few months are going to be especially difficult for sdry. The Coronavirus issue is clearly impacting everyone, but given that sdry’s online is not great, and that retailers are going to be generally depending upon their most established markets (ie UK for sdry), we are going to see just how weak the brand is.
They must be very worried.
IMHO
There’s a lot that can continue to go wrong here, as well as the opportunity to go right.
It always worries me that in situations like Ted faces, the difficulties are doubled by the shortage of inherent understanding of why it’s gone wrong, and what, or who, could straighten things out.
Just who is it that is going to pinpoint the best CEO for the task? The board is shot to sh*t, and there doesn’t seem to be a safe and skilful handover at executive level. Let’s be truthful, anyone in a senior position knew for years of the behaviours at Ted, and it wasn’t just Ray Kelvin. It was known in the wider industry.
It was convenient that Jennifer Roebuck was right under their noses. Or you might think it’s a lazy appointment, more from desperation than anything else. Was at French Connection (haven’t they made a loss for 8 straight years? and largely as a failure to spot and react to online competition from the likes of Asos), and recently at Feel Unique, a website operator selling cosmetics, plus a couple of stores. It’s not Ted Baker type of structure at all. She may be great, I don’t know. And at least having worked for Stephen Marks, she probably had an understanding of certain types of retailing gentlemen (I use the term loosely).
Beth Butterwick to Karen Millen, Susan Harlow to Jack Wills, Euan Sutherland to Superdry, Paul Price to Top Shop, Jill McDonald to Mand S. I’m sure there are plenty of people that would be up for taking on the job, but as the above list shows, it’s very easy to hire, it’s a little harder hiring well.
Well there is a surprise element here. They said sales were not as good as expected, therefore, surprise.
Selling at full price rather than at discount is a no brainer...provided people are willing to go along with that. They're not willing at the moment, and therefore the simple reset of reeducating the customer might have been pressed a little prematurely.
Things take time, for sure, but at the risk of repeating myself, I am discouraged by the lack of new talent. JD is working with what didn't leave. He presided over those failures arriving, watched them wreck his business, and then watched them leave. Where is the new talent? Does he really think he can do this all by himself?
I missed this paragraph from a recent article.
'To bolster its fashion credentials, the company hired Phil Dickinson as its creative director at the start of this year. However, the former Nike executive clashed with the financial press at a presentation in the City designed to trumpet his work on new ranges. He said talking to business reporters about fashion was like “talking to a brick” and told one female journalist not to touch the arm of his £600 Superdry varsity jacket with her “sweaty journalist palm”.'
Bit prickly :-)
So Sutherland winds up at Saga. Lol. Much more suited. It’s perfect hahaha.... Expect his mini-me, Paula Kerrigan to join promptly, so he doesn’t have to do any boring stuff. ;-)
Remember Nick Tatum? Global Retail Director? Came from Tesco’s bakery. Well he’s landed a new job, too. Chief Customer Officer at.......Moto, motorway services. Lol again.
Slightly off SDRY, but this is a familiar pattern. M and S hired from Halfords to run women’s. She got booted after a while when results got worse. Jack Wills hired from Debenhams. She got booted after a while. Topshop hired an American guy from Burberry marketing. We all know how it’s going there, and he’s gone this morning, ‘back to America’.
It just shows how bad some hires can be. How completely off track skill sets. And these people, they don’t care about the brand, they want cash. If you can go from supermarket bakery, to superdry, and then to Moto Service stations, you don’t give a rat’s ass where you are.
I am amused .
I always believed the brand could be resurrected, in UK. I also believe the brand as it stands still has lots of opportunities for growth in new markets. But it has to be done right. This is where my concern lies.
Sure enough, things were terrible, and JD had to get involved to halt the self destruction. All good.
He can no more be a CEO to this beast, any more than he was when Sutherland came in to deal with things that JD is no good at. Not that it worked out well, obviously.
Lots of senior managers left. Not saying they were great, but arguably better than nothing. COO left, HR Director left, Global Retail Director left (maybe Tesco’s bakery will have him back).
None of the above are JD’s forte, or interest. He’s product, and store visual, design etc. Operationally with the 100’s of stores, I’d say there’s nobody close to the level required. Even with great product, if the execution is off, if online is singing, they’re crippled.
Part of the recruitment problem is, for those suitable candidates, that the company is in Cheltenham, not London. On top of that, they were always rather disconnected from the network. At this point, the lack of incoming talent is not a good sign. JD is working with what was left over. The lack of progress here troubles me.
I have to say I’m losing some confidence here. I thought by now JD would have got some quality personnel in to help get this ship not just ‘steady’, but firing on more than one cylinder.
The company is much bigger and more complex than when he gave up the CEO role last time. Being a CEO is not his forte, IMO, and his other interests from cider to hotels, politics to keeping his mrs. entertained, might suggest he’s spread a bit thin. There’s a bit of a vacuum in senior talent, and nobody that is properly running retail. The cracks will appear I feel, and I rather disappointedly see me taking opportunities to slim my holdings here.
Historically, SDRY has always had a reputation for carrying ridiculous amounts of SKU's in its' warehouses. Some of that was usually attributed to JD's passion for buying way too much. But yes, the most recent management were failing in a number of fundamental areas largely down to the fact that they weren't proper retailers. There are so many things to address, but I am confident that with some quality hires, things will find a way of achieving some prudent retail discipline. To this end, I hope JD gets on with finding someone who is experienced at clearing up messes, as this clearly is.
I referenced Susanne Harlow at Jack Wills recently. I couldn't see why Templeman had shipped her in from Debenhams to head up a 'preppy' style fashion retailer. Obviously its gone t*ts up. She has now been fired by Mike Ashley. Also, news from Karen Millen (another one down the plughole) is that CEO Beth Butterwick has 'left the business'.
Tough times. But some of these problems seem very self inflicted. Harlow to Jack Wills being an example. Sutherland joining SDRY obviously... I hope that between JD and Peter Williams (who is well connected) don't just grab a name that is suddenly available from a previous disaster (Sutherland again).
My understanding of SDRY is that it is quite insular, not least because it's based in Cheltenham. That doesn't help when it comes to being able to identify the right talent for the many roles of a business this size. Thats why I want to see someone come onboard that is from a relevant, successful brand, that gets the current consumer habits, that has an international knowledge of the key markets. They also need to have an incredible network in order to take advantage of the talent coming out of these other struggling retailers, as there's going to be some good people being displaced right now. Peter Williams says they have a recruiter working on it. I hope they're making progress.