Superdry confirms talks with advisors, but gives no detail

Struggling Superdry issued a stock exchange release on Monday, responding to “recent press speculation”. 

It said that “in line with the company’s turnaround strategy”, it confirms it’s “working with advisors to explore the feasibility of various material cost saving options. Whilst there is no certainty that any of these options are progressed, they aim to build on the success of the cost saving initiatives carried out by the company to date and position the business for long-term success”.

And it reiterated that it has “continued to prioritise driving forward its cost-reduction agenda”. That calls for it to deliver “in excess of £40 million in savings this financial year, ahead of the initially stated target of £35 million, with more than £20 million of those savings already achieved in H1”.

So what was the report that had sparked this release? Sky News had said the company was looking at a “radical restructuring” and was working with PwC on “options that could lead to store closures and rent cuts”. 

It said there could be “significant numbers” of such closures along with job cuts and that the plans might lead to “a company voluntary arrangement (CVA) or restructuring plan”. A CVA could see it forcing through rent cuts with landlords.

But the report also said that “detailed proposals” haven’t yet been formulated and there was little indication so far of “how many of the company’s 3,350 staff and more than 215 stores might ultimately be affected”.

That Sky report came after last Friday’s update that showed the firm’s weak sales trend isn’t improving, as well as news that its CFO is to exit in March with an interim CFO being drafted in.

The once unstoppable Superdry has seen a deluge of problems in recent years with co-founder Julian Dunkerton having launched a boardroom coup in 2019 over the underperformance at the chain. But with the pandemic coming less than a year after his return, the company has faced major challenges with falling sales, mounting losses and several initiatives to both cut costs and raise new finance.

While the company’s share price rose slightly on Monday, the shares are changing hands for a price that values the entire business at less than £18 million. It was worth 124 times that figure back in January 2018.

There has been ongoing speculation that Dunkerton, who owns around a quarter of its shares, might try to take the firm private, which would allow it to deal with its turnaround away from the glare of a stock exchange listing.

Other major British mid-market chains that are also privately held have gone through the CVA process and emerged successfully on the other side, including Jigsaw and Monsoon, both of which are now on expansion drives.