Superdry's survival strategy

Superdry facing pre-insolvency worries

Superdry is a UK-based clothing and accessories retail store, accessible both online and in shopping centres across the country. 

Rumours have been circling for a while regarding Superdry’s financial standpoint, which came to a head this April when they announced the retailer’s survival plan. This plan consists of three key elements in a bid to “allow Superdry to return to a more stable footing, accelerate its turnaround plan and drive it towards a viable and sustainable future” - said the company in its regulatory filing. The three elements include a restructuring plan, equity raise and becoming private.

Entering the restructuring plan

A restructuring plan is a procedure carried out under the Companies Act 2006 for companies facing financial difficulties. Sky News reported that M&G, Superdry’s landlord, has requested the help of Hogan Lovells to review the restructuring plan to ensure its success. A wholly-owned subsidiary of the company, C-Retail, which owns the leasehold portfolio for the Superdry Group, is said to have been behind the release of the restructuring plan.

This retailer’s plan focuses on brutal rent cuts across 29 of its stores within the UK, with a spokesperson saying, “We hope our landlords will support us as we embark on putting in place our new target operating model”. Landlords under the plan do have the option to terminate their leases to the stores should they be unhappy with the proposed terms of the deal.

Their plan also includes improving product ranges, improving advertising strategies and re-organising marketing costs to encourage recovery and continuation. Additionally, Superdry has requested an extension to certain maturity dates of loans made under its debt facility agreements with Bantry Bay and Hilco.

Superdry at the start of this month stated that it would need to enter administration if the restructuring plan was not put in place.

Equity raise required:

Superdry’s restructuring plan can only become successful on the completion of the equity raise. The retailer’s founder and Chief Executive, Julian Dunkerton, is funding a £10m sale of new shares to assist in the company’s hopeful forward journey. This decision requires the shareholder approval before any steps can be taken.

Dunkerton, at the release of the plan, said “My decision to underwrite this equity raise demonstrates my continued commitment to Superdry, its stakeholders, its suppliers and the people who work for it. My passion for this great British brand remains as strong today as it was when I founded the business.”

Going private

The final element of the retailer’s survival schedule is its plan to de-list from the London Stock Exchange and go private. (Another action requiring shareholder approval)

The current price (on 30 April 2024) for 1 instrument on the LSE for Superdry plc is listed at 6.70GBX, a huge 92% reduction from its 84.70GBX value at the start of May 2023.

This move off of the LSE comes with the claim from Superdry that it could help “achieve significant annual cost savings” to assist in its recovery.