Y2K fashion favourite, Superdry is trying desperately not to become the latest high street brand to go into administration, as it announced yesterday that it is drawing up plans to close some of its 96 UK stores.
Last Friday, the clothing group’s boss Julian Dunkerton admitted Superdry was facing a “difficult period” ahead due to a poor autumn trading. The retailer’s sales plunged 23% to £219.8m in the six months to 28 October.
Launched as Cult Clothing Co in 1985, the brand enjoyed a meteoric rise in the 2000s as university students flocked to its unique designs and celebrity-endorsed sportswear. But, it’s since been battling a steady decline in sales numbers as consumers go cold to its colourful Japanese lettering.
We examine what went wrong at the company, and what retailers can learn from SuperDry’s example.
Despite its use of nonsensical Japanese Kanji characters (which it has since wisely dropped) Superdry was undeniably a British retail phenomenon.
Founded in 2003 by Dunkerton and James Holder, who was running the skatewear brand Bench, the brand went from a market stall in Cheltenham, to a huge multi-storey flagship on London’s Regent Street.
The early years were golden. Alongside Jane Norman and UGG, the Superdry label rose through the ranks of early 2000s fashion to be splashed across every millennial’s Facebook photo albums. At its peak in January 2018, the company was publicly listed at £1.6bn.
But, the first threads began unravelling at Superdry back in 2015, when Dunkerton handed over the reins of the business to a new chief executive, Euan Sutherland.
Sutherland’s tenure at the business was marked by a reliance on discounting products to boost sales. This promotional pricing strategy heavily impacted Superdry’s brand image, previously known for a premium appeal and high price point.
In October 2018, Superdry issued a shock profit warning after it emerged that only 52% of clothing had been sold at full price that year. Shares in the group crashed 20%.
Spooked, Dunkerton – who had announced he was stepping down from the company to focus on “other demands” earlier that year – immediately attempted to force his way back into the boardroom in a bid to reverse the share price decline.
In a corporate game of he-said-she-said, Dunkerton criticised the retailer’s “misguided strategy” to reduce pricing both in stores and online, claiming he had always predicted it would fail miserably.
In answer, the board blamed the autumn-winter 2018 range which led to the sales decline on Dunkerton, adding that he had “failed to accept any responsibility” for it.
Despite warnings from the board to shareholders not to let Dunkerton back onto the board, he was reinstated in March 2019. Sutherland would be forced out one year later.
Struggle to stay on trend
Back at the helm, Dunkerton decided to make Superdry cool again by moving away from the t-shirts and coat designs that were now oversaturating the market.
The company recruited a new chief product officer, Brigitte Danielmeyer, to help redesign its stock. But this wasn’t all about the sketches. Crucially, the range would go from design to delivery in just six weeks – signalling Superdry’s move into the fast fashion space.
Selling off some of the legacy stock created under previous management, the store’s gross margin rose healthily by 3.2% at the end of 2019. Yet sadly, Superdry’s quick change wasn’t fast enough.
Brands like Zara and Asos had already established themselves as frontrunners of the fast fashion industry. They were attracting younger emerging audiences like Gen Z with their product lines, which were largely sold through their websites.
By this point, this growing list of competitors was miles ahead with ranges of trending athleisure wear, leaving Superdry in the dust.
For a moment, it looked like Superdry could pull off a remarkable recovery. In 2022, Superdry reported it was back in the black in January after a strong Black Friday week online. Revenue sales were up 3.6% on the year before.
Sadly, as has been the case for many UK retailers, this run of good luck soon stagnated in the face of a cost-of-living shaped wall. Economic downturn and lower disposable income combined to negatively impact consumer spending, hitting profitability.
Now, in 2024, Superdry is facing the same troubles as retailers like John Lewis and Next. Last week, blaming the “remarkably unseasonal weather” that befell the UK last autumn, Dunkerton said that recent trading had seen revenues drop by 23.5%.
“This has clearly been a difficult period for Superdry,” Dunkerton said. “A challenging consumer retail market, set against a backdrop of macroeconomic uncertainty, have combined to weaken the financial performance of the group.”
As a result, Superdry’s shares have crashed even further. From that initial market high of £1.6bn, Superdry was valued at £55m when trading in the shares was suspended last Wednesday.
What’s next for Superdry?
Superdry is now working with PwC to explore “cost saving options”. Reportedly, these could include store closures and cuts to its 3,350-strong workforce.
With 96 stores in the UK, including some of the most expensive locations in London for business rates, the organisation will likely attempt to negotiate rent cuts with landlords. It has also appointed a new finance boss – the fifth in five years.
But, as Superdry’s tumultuous history shows, the firm’s woes are not all external. Other retailers, including Marks & Spencer, have reported buoyant Christmas trading.
To win back its customers, let alone attract new ones, Superdry needs a more compelling offer. The brand is still defined by the early noughties success it refuses to let go of.
If it can sort its volatile profitability, Superdry’s next challenge is to put an end to its revolving door of leadership, and create a new look for the brand. One that will take this Y2K label from nostalgic to novel, for a new generation to enjoy.