Superdry (SDRY) founder Julian Dunkerton has only been back at the top of the retailer since April, but revealed that poor performance from both wholesale and e-commerce meant full-year adjusted profits for 2019 were likely to be below market expectations.
Revenue from the store portfolio was down 3.7 per cent for the year to April 2019, but management said it was the "weak" performances from the wholesale and e-commerce businesses – which grew 3.6 and 1.6 per cent, respectively – that would cause profits to fall below the £54.1m-£59.4m range previously forecast.
However, because the update covered trading for the period from the end of January until the end of April, the bad news could be safely laid at the feet of the previous management, many of whom resigned immediately or served notice when co-founder Julian Dunkerton and ally Peter Williams were appointed as directors at the beginning of April.
Mr Dunkerton and Mr Williams were voted in, despite a 49 per cent vote against their appointment. The hotly contested return was an attempt by the group’s co-founder to put his mouth where his money is.
Mr Dunkerton had been publicly critical of the group’s management after selling a large chunk of his holding in July last year. He and fellow co-founder James Holder criticised a “damaging change in strategy” for a 75 per cent share price drop since the beginning of 2018. They proposed rebuilding the group as a “design-led” business, as opposed to the “buyer-led” fast fashion strategy favoured by previous management.
Since rejoining, Mr Dunkerton has scrapped plans for a footwear licensing deal with Pentland Brands, increased the number of options sold online and plans for 500 new products to be introduced in the first six months.
Prior to his appointment, he and Mr Holder said it would take two to three years to restore the group to profitable revenue growth and double-digit operating margins.
Some shareholders have already given the duo their support. Alastair Mundy and David Lynch of Investec Asset Management, which upped its stake to 10 per cent of the group following the board changes, said they “chose to back the co-founders given our belief in their ability to breathe fresh life back into the company they founded and have previously led to notable success”.
Andy Brough, head of pan-European small- and mid-cap companies at Schroders, said the trading statement demonstrated why they backed Mr Dunkerton's return, saying: "There is a lot of work to do to re-establish Superdry as a stock market darling... we took the view that the journey had the best chance of success by having Julian back at the helm."
