As speculation swirls around a potential CVA or a deal to take the business private, Retail Week explores what’s next for Superdry and whether a turnaround is really on the cards.
Following confirmation that boss Julian Dunkerton is eyeing a takeover bid for the struggling fashion retailer and is in talks with “potential sources of finance” to help fund a cash offer, it’s been a busy end to the week for Superdry.
While all eyes are now on a potential deal to take the business private, a restructuring or CVA still remains on the cards as Superdry works with advisers at PwC to explore options.
As CFO Shaun Wills confirmed his departure in the week prior and the embattled fashion retailer issued yet another profit warning, the future of the business is more uncertain than ever.
Having secured £25m in funding from Hilco Capital, as well as selling its Asia-Pacific and South Asian intellectual property assets last year in a bid to generate some much-needed cash, cost-saving has been a top priority for the brand more recently.
But could a CVA or deal to go private be the solution to Superdry’s problems, or would either still just be papering over the cracks?
Ageing brand
Retail Week spoke to a former senior staff member of Superdry who said that due to it being associated with an older demographic and the brand having aged with its shoppers, Superdry is struggling to win over younger customers in today’s market.
They observed that Superdry’s stores look and feel the same as they always have and that downsizing the store estate would allow the business to step away from some of its underperforming locations.
However, while reducing the store estate may slow the downward spiral, Superdry needs to reinvent its in-store experience and excite shoppers about the product if it has any hopes of turning its fortunes.
To sell or not to sell
Despite all eyes being on a potential restructuring of the business, sources say that a sale could be on the cards.
With retail giants including Authentic Brands and Frasers enjoying shopping sprees of late, would Superdry be a good addition for any of them?
While Next had also previously been suggested as a potential buyer, the fashion giant denied the statement and told Retail Week it is not in talks to make a bid for the embattled brand.
An industry source said: “As Superdry’s balance sheets are stretched and consumers are not spending what they were, it could be an opportune time for a sale.
“Frasers Group would be a good fit as it could plug Superdry into its stable of brands, which already includes the likes of Jack Wills.
“I don’t think a CVA process is right for Superdry’s long-term trajectory, but it would right-size the business while Julian hangs on and allow it to survive another economic cycle.
“It would just be delaying the inevitable, although it could be good for the employees and give them jobs for a longer period of time.”
Turning the ship
Since returning to the business in April 2019, it’s been a rocky road for founder and CEO Julian Dunkerton.
Dunkerton has remained dedicated over the years, demonstrated by his return as CEO during turbulent times, as well as his underwriting of the entire £12m equity raise and now with the potential of him making an offer for the business.
When speaking to Retail Week ahead of the news that Dunkerton is in talks regarding a takeover bid, the former Superdry staff member said that it would seem unlikely he would agree to a sale of the business, unless as a last resort.
So, after another turbulent week for Superdry, with a potential CVA or even a sale now on the cards, what the future holds for the business has never been more obscure.
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