Daily Newsletter

17 April 2024

Daily Newsletter

17 April 2024

Superdry seeks revival through restructuring and potential delisting

The company's core strategy involves streamlining operations and improving cash flow across its business.

Luke Martin April 16 2024

British fashion retailer Superdry finds itself at a crossroads. Facing declining sales and mounting losses, the company has unveiled a comprehensive restructuring plan designed to achieve financial stability.

The plan, a mix of cost-cutting measures, fundraising efforts, and a potential departure from the London Stock Exchange, represents a bold attempt to steer Superdry away from the brink.

The company's current financial situation paints a grim picture. Sales have plummeted, and losses continue to pile up.

Superdry acknowledged the severity of the situation, warning that administration, a form of insolvency, could be a very real possibility if the restructuring plan fails to gain traction.

The restructuring plan itself is a multipronged attack on Superdry's financial woes.

The core strategy focuses on streamlining operations and improving cash flow. This will involve negotiating rent reductions for 39 of its UK stores, a significant cost-saving measure.

Additionally, Superdry will seek to extend the maturity dates of existing loans, providing much-needed breathing room to manage its debt obligations.

Another critical component of the plan is a fundraising effort targeting up to £10m ($12.45m) in new equity. This initiative will be spearheaded by co-founder Julian Dunkerton, who remains a major shareholder and the company's CEO.

Dunkerton's involvement in the fundraising sends a strong message of confidence in Superdry's future.

However, perhaps the most drastic measure proposed is the potential delisting from the London Stock Exchange. This move, subject to shareholder approval, aims to significantly reduce the costs associated with being a publicly traded company.

Delisting would also allow Superdry to implement its turnaround plan with less scrutiny from the often-fickle public markets.

However, the delisting carries a potential downside: a decrease in share liquidity, which could make it harder for existing investors to buy or sell their holdings.

The impact of the restructuring plan is expected to be limited for most stakeholders.

Primarily, it will affect rents at UK stores and potentially impact share liquidity after delisting.

Suppliers, employees outside the UK, and landlords of non-UK stores are expected to be largely unaffected.

Superdry's long-term goal through this restructuring is to establish a more sustainable financial model. The company said it is aiming for revenue to reach between £350m and £400m in the medium to long term. This target signifies a belief that Superdry can not only recover but also thrive in the coming years.

While the challenges facing Superdry are undeniable, Dunkerton's continued involvement and focus on cost reduction offer a glimmer of hope for the business' recovery.

The coming months will be crucial as Superdry navigates the complexities of its restructuring plan and seeks shareholder approval for delisting. Only time will tell if these measures will be enough to secure Superdry's long-term future.

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