Superdry blames Dunkerton for product problems ahead of April EGM
Fashion chain Superdry has urged its shareholders to vote against the appointments of co-founder Julian Dunkerton and Peter Williams as directors at a general meeting due to be held next month.
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Dunkerton and co-founder James Holder, who founded Superdry in 2003 and together own a 29% stake, called for the meeting to install Dunkerton as a non-executive director after what they said was an “alarming” slide in the company’s share price. They have also proposed Peter Williams, the former Selfridges chief, as an independent non-executive director.
Dunkerton said by returning the two co-founders to the business, “Superdry would return to being a design-led business: they would reinvigorate the DNA of the brand and get the business back on track.”
Superdry said on Monday that the meeting would be held on 2 April.
But the board added a statement to convey their "wholehearted commitment" to delivering the current strategy, which under chief executive Euan Sutherland has "yielded significant operational and strategic progress" amid an "intensified transformation programme" launched in December, it said.
However, a profit warnings in October and November was followed last month by news that third-quarter revenue had dropped, with Sutherland pinning the blame on unseasonably warm weather and product mix, leaving it with piles of unsold autumn/winter season clothes.
On Monday, the FTSE 250 company explicitly blamed Dunkerton for these product problems and said that there has been no support indicated from City investors for Dunkerton's return.
"Mr Dunkerton, as the company's brand and product director (the role he wants to return to), had prime executive responsibility for the design direction, range selection and range build of the Autumn/Winter 2018 range, which contributed to the company's underperformance in FY19, and which was representative of underlying issues in the approach to product and innovation. Mr Dunkerton has failed to accept any responsibility for the Autumn/Winter 2018 range, even going as far as to claim that he had no involvement despite extensive and detailed evidence to the contrary."
Superdry went further, saying that the board unanimously believes the founder's return "would have damaging business impacts", including leading to "a strategy that would fail", with a "return to a narrow and concentrated range mix" with a "disregard for consumer and data insight".
The board also said the board changed would be "divisive" and distract from the delivery of current strategy, as well as "reintroduce a leadership style that does not fit within the open-minded collaborative culture, values and operation of the company" and "damage morale across the business and cause departures of key personnel, including from within the board".
After an initial public offer at 500p in early 2010, Superdry shares had a rollercoaster ride, twice surging to around 1,800p with a fall to half their listing price in between amid a peppering of profit warnings, before Dunkerton handed the reins in October 2014 to former Co-op boss Sutherland. Under the regime, the shares hit new heights above 2,000p last year but are now trading at little more than their their float price.
The shares edged higher on Monday but after an hour and a half's trading were down a penny and a half to 520.5p.
Analysts at Peel Hunt said: “To date there is no sense that Julian has garnered support for his motions from any of the larger institutional shareholders, who we believe continue to back the current strategy and management team."