Superdry slumps as management quit en masse following Dunkerton re-election

Superdry PLC (LON:SDRY) slumped in early deals on Wednesday after it suffered a mass exodus of senior management following the re-appointment of founder Julian Dunkerton to its board.

In a statement after the close on Tuesday, the company said incumbent CEO Euan Sutherland, chairman Peter Bamford, chief financial officer Ed Barker and remuneration committee chairman Penny Hughes had all resigned with immediate effect.

READ: Superdry founder Julian Dunkerton re-elected by wafer-thin margin

Four non-executive directors, Dennis Millard, Minnow Powell, Sarah Wood and John Smith, had given three months’ notice and would also stand down from 1 July.

The firm’s joint corporate brokers, UBS and Investec, also resigned their positions in a separate announcement.

Dunkerton would step in as interim CEO following the departures while Peter Williams, chairman of online fashion retailer Boohoo Group PLC (LON:BOO) who was also elected along with Dunkerton, would become the company’s new chairman.

“We are very pleased to be joining the Board of this great British company. We look forward to rebuilding the Superdry brand and the business”, Dunkerton and Williams said in a joint statement.

The en masse resignations followed a tense emergency general meeting on Tuesday morning when Dunkerton scored a narrow victory in his bid to return to the company having previously left last year.

In a nail-biting finish, shareholders approved Dunkerton’s return in a vote of 51.15% in favour and 48.85% against, while Williams was also elected to the board by the same margin.

The senior board members had previously threatened to walk if Dunkerton was re-elected, saying his return would be “extremely damaging”.

Turnaround time

Dunkerton’s previous departure was blamed on a “fundamental disagreement” about future product design and the company’s international expansion plans.

Since his resignation, the company and its shareholders have suffered two profit warnings and a weak set of third-quarter results in early February, as well as being the only retailer among its peers to report a fall in online sales for the autumn/winter period last year.

The company has also seen its share price fall around 65% in the last 12 months and has been demoted from the FTSE 250.

This decline is what spurred Dunkerton to push for re-election, saying “urgent action” was required to address the sharp decline of the shares.

He blamed the deterioration on the “misguided strategy” of the previous board and that after having proposals rebuffed privately for several months, there was “no choice but to let shareholders decide the best outcome”.

“Short-term pain before long-term gain”, says broker

In a note to clients, analysts at Peel Hunt said the company would likely see “short-term pain before long-term gain” as sell-offs from shareholders who voted against Dunkerton’s re-appointment and costs from transitioning the business took their toll.

“For us, the key challenge is to reinvigorate the core Superdry proposition, which has suffered from a lack of innovation stemming back over several seasons…there remains a clear long-term value if [Dunkerton] can quickly steady the ship”.

In terms of the resignations, the broker said the departure of the board was “expected” and that it would be more concerning if there were “further departures at an operational level through heads of teams”.

They added that the recruitment of a “heavyweight CEO” was now a priority.

In early morning trading on Wednesday, Superdry shares were down 11.3% at 443.3p.

–Adds broker comment and updates share price–

Story by ProactiveInvestors