Superdry founder eyes Rcapital backing for takeover bid

Business

The founder of Superdry is in talks with the owner of Laura Ashley and an investor which previously backed Paperchase about a bid to take the London-listed fashion retailer private.

Sky News has learnt that Julian Dunkerton has held initial discussions with Gordon Brothers and Rcapital, both of which specialise in investments in financially challenged companies, about helping to finance an offer for Superdry.

The talks are not yet at an advanced stage and people close to them cautioned that they may yet fall apart.

Rcapital is a backer of a firm called Retail Realisations, which has invested in a number of distressed high street chains.

Mr Dunkerton, who in 2019 returned to the company, having previously been ousted, owns just under 30% of the shares, which more than doubled on Friday after Superdry confirmed his interest in a bid.

After a calamitous period punctuated by a string of profit warnings and urgent debt- and equity-raisings, Superdry now has a market value of less than £50m.

The company also has more than £100m of borrowings, after securing funding from Bantry Bay Capital and Hilco.

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In a statement on Friday responding to a spike in its share price, Superdry said: “Julian Dunkerton has… confirmed… that he is engaged in discussions with potential financing partners (“Potential Sponsors”) for the purposes of considering options in respect of the company, which may include a possible cash offer for the entire issued and to be issued share capital of the company, not already owned by him.

“These discussions are at a preliminary stage and no decisions have been made.”

It was unclear whether other parties besides Rcapital and Gordon Brothers were also talking to Mr Dunkerton.

News of his fresh interest in taking the company off the stock market has emerged just days after Sky News revealed that it is weighing a radical restructuring that could involve significant numbers of store closures and job cuts after reporting weak sales.

Superdry is in talks with advisers including PricewaterhouseCoopers about plans that could lead to a company voluntary arrangement (CVA), an insolvency mechanism enabling businesses to reduce their liabilities to creditors.

This could be aimed at closing underperforming shops – with a commensurate impact on jobs – and forcing through rent cuts with landlords.

Detailed proposals have yet to be worked up, and there remains little indication of how many of the company’s 3,350 staff and more than 215 stores might ultimately be affected.

Last week, Superdry announced that its finance chief, Shaun Willis, would step down in March.

Giles David, who has previously worked at McColls, Casual Dining Group and Wiggle, is to replace him on an interim basis.

In recent months, Superdry has raised cash by offloading its brand in regions including India and Asia-Pacific.

Late last year, its shares sank to a record low after it blamed abnormally mild autumn weather for weak sales.

After a trading update last week, the shares crashed even further, leaving it with a market capitalisation of just £16m.

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September 2023: Michael Browne on Superdry

“The consumer retail market remains challenging and unpredictable, and sales performance has not been helped by the extreme weather events of the summer being followed by one of the warmest autumn seasons on record, which persisted through the peak Christmas trading period,” Superdry said in last week’s statement.

“We are mindful of these external and macro factors and as outlined as part of our December trading statement we expect full year profitability to be impacted by the weaker trading we have seen to-date, and internal expectations remain consistent with that view.

“As a management team, we continue to focus on the delivery of our cost efficiency programme and further opportunities to reduce the fixed cost base of the business, with in excess of £40m of savings due to be realised within the year.”

Superdry and Mr Dunkerton both declined to comment.

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