Julian Dunkerton’s six-month campaign to wrestle back control of Superdry ended in stunning success for the brand’s co-founder. Now, he may have to deal with an insurgency of his own.
Hong Kong-based activist fund Oasis made a decisive intervention in Dunkerton’s re-election campaign, quietly building a small stake and then voting in his favour in April last year. Some 16 months later and Superdry’s shares have fallen by three-quarters to £1.35. Awkward.
Now a second activist has waded in. Gatemore Capital, which has lobbed grenades at retail bosses in the recent past, took a 3% stake in July. Between them, the activists own more than 8% of the clothing company’s shares; Dunkerton has 18.5%.
For now, both remain supportive — he cannot be blamed for Covid-19, after all. But the pressure to deliver the turnaround he has promised is on.
Alongside his old friend James Holder, Dunkerton established Superdry in Cheltenham in 2003. It had global sales of £1.6bn at its peak and won endorsements from the likes of David Beckham. Dunkerton stepped aside as chief executive in 2014 and fell out with his successor Euan Sutherland before leaving the business altogether in 2018.
Dunkerton’s relationship with Peter Williams, his new chairman, has been a fraught one, too. Williams, 66 — middle name Wodehouse — is cut from a different cloth to Dunkerton, 55. The corporate veteran, who has served on the boards of Asos and Boohoo, has assembled a board of experienced professionals to rein in some of the co-founder’s more exuberant instincts.
Since returning, Dunkerton has restarted work with the SuperDesign Lab, a product innovation hub led by Holder, and expanded the brand’s product range. But Covid-19 trampled on any green shoots of recovery there were, with enforced store closures causing total sales to drop by 24% in the 13 weeks to July 25. Covid’s impact on Superdry’s profits will be revealed at its annual results next month.
Despite the grim trading numbers, investors have been reassured by Superdry’s £57.8m cash pile. It also managed to replace its revolving credit facility with a £70m asset-backed lending facility, extended by a year to January 2023.
Analysts at Peel Hunt believe Superdry’s exposure to department stores and city centres will depress sales, driving an underlying pre-tax loss of £25.8m this year and £16.4m next year — not the sort of numbers activist investors tolerate for long.
This is a stock to keep in the wardrobe. Avoid.
