There used to be many reasons for shoppers aged over 30 to walk past a Superdry store. For a start there was the loud music, the bright clothes that seemed to fit only petite, right-on teenagers, the excessive branding (including the meaningless Japanese characters — cultural appropriation, anyone?) and then, of course, there was the price, which could be steep. Not to mention that if you bought a Superdry puffer jacket, one of its “iconic” products, the chances were you would bump into someone wearing the same one.
However, that vision of Superdry is long outdated and the retailer is fast on its way to becoming a global brand. As such, it is worth more than a casual glance from punters.
Superdry traces its history back to a market stall in Cheltenham, when Julian Dunkerton, one of the brand’s co-founders, started selling T-shirts on a stall. However, Superdry, as we know it today, truly took off when Mr Dunkerton, now 53, joined forces with James Holder. They opened their first shop in Covent Garden in 2004 before floating in March 2010 at £5 a share, with a portfolio of 40 stores and 54 concessions.
Mr Holder, 46, was a design genius while Mr Dunkerton was the expert in marketing. For a while it seemed that Superdry could do no wrong. However, from about 2011 onwards, as sales slowed and profit warnings were issued, it became clear that the brand would have to “grow up”, to use Mr Dunkerton’s own words, if it wanted to stay the distance.
“Growing up” for Superdry has meant expanding its range of clothing and attracting a wider customer base (let’s not forget its teenage fans from its very early years are now all grown up). It also had to improve the efficiency of its operations, cut costs, increase its routes to market and expand its geographical areas of operation. Superdry also has been investing heavily in its digital operations and is probably ahead of the curve compared with many of its rivals.
This has not been an easy process. During the overhaul, Mr Dunkerton made way as chief executive for Euan Sutherland, who joined from the Co-operative Group. One of the first things Mr Sutherland did when he joined was to carry out a full strategic review and implement a supply chain shake-up. Since then he has overhauled logistics and improved the efficiency of its wholesale and retail businesses. The product range has been vastly expanded.
The results seem to be speaking for themselves. Last year Superdry’s underlying profits were up 18.4 per cent at £87 million on revenue that rose by 27.4 per cent to £752 million. Superdry’s products are sold in nearly 150 countries online and it has a global portfolio of more than 550 stores, which are either owned or franchised.
As Superdry’s global rollout gains pace, it has been beefing up its buying, design, product and marketing teams to reduce the reliance on its founders. Which is just as well, as Mr Holder is now involved with Superdry only on a consultancy basis and Mr Dunkerton said last week that he was stepping down from the group. Both men still own large stakes and clearly are confident that its share price is on the rise: they have pledged to distribute a fifth of any share price gain they make to staff once Super Group’s stock has passed an £18-a-share threshold. The shares still have some way to go, however, closing up yesterday slightly at £15.65.
Cash generation at Superdry is good and growing and, with its strategy of returning excess cash to shareholders, it means that increasing special dividend payouts in the future seems likely.
ADVICE Buy
WHY Shares have had a good run, but Superdry is still trading at large discounts to other UK and international peers. Look for buying chances
Fidessa
Sometimes, it’s worth the wait. Fidessa finally broke cover yesterday with the basic details of two potential new bidders, only two days before shareholders in the financial software company were due to vote on a recommended acquisition by Temenos, of Switzerland.
Fidessa produces software that makes it possible for financial insitutions to trade securities from equities to derivatives with each other. It also operates a global network for professional dealers. In late February, it agreed to be bought by Temenos, which had offered £36.467 a share, consisting of £35.67 in cash plus a 79.7p dividend that the software firm had agreed previously to pay.
The company told investors yesterday that two unnamed parties had come forward with potential offers. One has floated a cash payment of £37.50 a share, also with the dividend thrown in, for an offer that, if formalised, would be worth £38.297 a share, or 5 per cent higher than the Temenos terms. Shareholders were not told anything about the possible terms of any offer from the other party, a hint that they probably were neither as strong nor as detailed.
Shareholders were to vote on the original proposal at a meeting tomorrow, but this has been adjourned to give Fidessa time to see if it can agree a formal offer at this, or indeed a higher, level that would give shareholders a better deal.
It is no surprise, then, that Fidessa’s shares leapt yesterday by more than 13 per cent, 505p, to £41.70, a healthy premium to any of the offers, agreed or notional. It feels as if Fidessa shareholders cannot lose. Despite this week’s cancelled vote, the Temenos offer stays in place, at least until April 27, which gives Fidessa plenty of time to secure a formal proposal from the other parties. Even if both were to abandon their interest, the offer from Temonos represented a 40 per cent premium to the prevailing share price before its interest became public. It is perfectly feasible that if Temenos does not want Fidessa to wriggle out of its grasp, it might improve its own bid still further. }
ADVICE Hold
WHY Unless you bought in after the Temenos deal you are guaranteed a profit
