Superdry co-founder Julian Dunkerton has won his battle to rejoin the struggling fashion retailer, prompting the company’s entire board to resign in protest at his return.
Dunkerton, the company’s biggest shareholder, has waged a six month campaign to be reinstated after an unsuccessful revamp by management resulted in a collapse in sales and profits, at what used to be one of the high street’s most successful fashion brands.
The problems have triggered a collapse in the company’s share price, wiping more than £2oom off the value of Dunkerton’s 18% stake.
The multimillionaire got his way on Tuesday at a bad-tempered shareholder meeting in the City, where he scraped just enough votes to secure a seat on the board.
The dispute has pitted the 54-year-old Dunkerton against a board that he claimed did not understand the fashion business.
Who is Julian Dunkerton?
Julian Dunkerton is the first to admit that Superdry is his obsession. “I live, breathe and wear Superdry,” the 54-year-old entrepreneur said recently of the fashion brand he co-founded 16 years ago. “I have other businesses, but Superdry is my obsession.”
After three Es at A-level put paid to his ambition of becoming a doctor, Dunkerton focused on fashion. Living off the Margaret Thatcher government’s enterprise allowance scheme, which paid budding entrepreneurs £40 a week, the public school educated son of a BBC producer started out selling clothes at Cheltenham market. That stall would morph into the successful Cult Clothing chain but Dunkerton really struck business gold in the early noughties when he teamed up with designer James Holder to start Superdry.
Superdry grew quickly, aided by celebrity fans like David Beckham, and in 2010 Dunkerton, who still owns 18% of the company, banked £80m when it floated on the stock exchange. The businessman, who drinks nine shots of coffee a day, shuns smartphones which he argues “clog” up people’s time with email. If he has any spare hours he fishes on the River Avon, near the company’s Cheltenham head office.
Dunkerton’s other interests include his family’s organic cider business and a chain of gastropubs and hotels in his native Cheltenham. He recently got remarried to the fashion designer Jade Holland Cooper who runs her own label.
Dunnkerton quit Superdry last year after a row over strategy but an interview last year contained a clue that he would find it hard to walk away: “I don’t want to sit on a fancy yacht and twiddle my thumbs,” he said. “If you were a brilliant tennis player you wouldn’t stop playing, would you?”
There was some evidence of that at the meeting as, while Dunkerton and fellow co-founder James Holder were dressed in skinny jeans, most of the men on the board were wearing what one analyst described as “Jeremy Clarkson style ‘smart casual’ combo”.
He needed a simple majority of votes cast to rejoin the board as a non-executive director and eked out 51.15%. “I can’t wait to get started,” he said. “The hard work starts now.”
But that was just the start. Following the defeat the Superdry directors held an emergency board meeting that concluded with all of them quitting.
The “Dunkerton putsch” resulted in the co-founder being rapidly promoted to chief executive after Euan Sutherland quit with immediate effect. Superdry chairman Peter Bamford and finance chief Ed Barker also followed him out the door in one of the most dramatic boardroom bust-ups seen in recent years.
Who is Euan Sutherland?
Euan Sutherland, who quit as chief executive of Superdry hours after Dunkerton forced his way back into the company, is best known for the way he walked out of his previous job – running the Co-operative Group.
The 50-year-old angrily stormed out of the mutual – then mired in losses and scandal – in 2014, after details of his £3.6m pay deal were leaked to the Observer. He immediately took to the Co-op’s Facebook page to rage against the organisation and quit the next day, blasting the Manchester-based group for being “ungovernable” in his resignation letter. He later received a £1m payoff.
The imposing 6ft 6in Scot started out as a graduate trainee at Boots but soon switched to the consumer goods giants Mars and Coca-Cola. He had stints at high-street chains including Dixons, Matalan and Superdrug, working his way up to the top job at B&Q before joining the Co-op.
Superdry’s band of non-executives directors have also handed in their notice but “mindful of their responsibilities … as custodians of the business and to the broader stakeholders”, a handful will stay on for a three-month handover at the Cheltenham based group, which employs 4,800 people.
At the shareholder meeting Peter Williams, the former Selfridges chief executive and ex-chairman of Boohoo put forward by Dunkerton to join the board, was also elected as a non-executive director and he too secured 51.15% backing from shareholders. However he finished the day as its newly appointed chairman, with the duo scrambling to assemble a new management team following the mass resignations.
The decision by shareholders to back Dunkerton fatally undermined the board. Sutherland, who has run Superdry since 2014 and was the architect of many of the changes publicly attacked by Dunkerton, was in an untenable position.
Several big investment institutions that have stakes in Superdry backed Dunkerton even though the board had threatened to quit if they did.
Bamford grudgingly accepted defeat but pointed out 74% of shareholders other than Julian Dunkerton and James Holder [the co-founder who owns 10% and supported Dunkerton] had voted against the appointments: “There was a narrow overall majority in favour and we accept that outcome.”
Dunkerton was supported at the meeting by Holder. The pair started the brand in 2003 and Holder designed many of its bestsellers.
The designer left three years ago but with Dunkerton back in charge, the pair will once again work closely together, with Holder revealing he has an armoury of 1,000 designs ready to go.
Dunkerton quit Superdry last year after disagreeing about the changes being made to how the company, which with annual sales of nearly £900m and 250 stores, was run.
Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk
He complained that Sutherland, a former Co-op and B&Q executive, did not understand fashion and it had gone from being an innovative brand to having a “misguided consultant-led business model”.
That change of direction contributed to series of profit warnings at the end of last year. The shares have lost two-thirds of their value over the past year and Dunkerton’s controversial victory triggered a fresh-sell off and they closed down nearly 9%.
Analysts described the vote as “tight, very tight” with Pirc, the shareholder advisory group, suggesting the lack of external shareholder support for Dunkerton’s re-instatement might present problems “further down the line”.