Investors Chronicle - Yesterday11 Apr 2024 07:12
Superdry: a cautionary tale
It can be unwise to put too much faith in one person – as evidenced by fellow small cap Superdry (SDRY). After co-founding the fashion brand in 2003, Julian Dunkerton abruptly left Superdry in 2018. The following year, he elbowed his way back in, arguing that his creation had veered off course and he had arrived to “save Christmas”. The entire board resigned in protest.
Dunkerton’s intervention didn’t pan out as hoped. Profit warnings have continued to flood in and the retailer is now loss-making and marred by “significant doubt” over its ability to continue as a going concern.
Earlier this year, Dunkerton – who owns about a fifth of the company – was in discussions with potential financing partners to explore whether he should make a cash offer for Superdry and take it private. However, he has now walked away from such a deal. Superdry remains in discussions about alternative structures, including a possible equity raise fully underwritten by Dunkerton, which would provide additional firepower for the turnaround plan. It is expected that any equity raise would be at a “very material discount to the current share price” and be conditional on a delisting.
For now, however, the company continues to limp along the stock exchange with a market cap of just over £10mn, compared with a peak valuation of £1.7bn. Dunkerton returned to Superdry intent on reversing a brief period of perceived mismanagement. However, his failed attempts to revive the brand spotlight the unforgiving world of fashion, the unpredictable nature of turnaround plans, and the sometimes misguided efforts of founders with too much emotional and financial skin in the game. END
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