$2 billion collapse of fashion icon Superdry turns ugly

Superdry's share price has collapsed after a series of profit warnings amid falling sales. Photo / Getty Images

Superdry products are "overembellished, over-branded" and all look the same.

The board of the British fashion brand, best known for the Japanese writing splashed across its hoodies and jackets, has sensationally trashed its own products in an escalating war of words with its ousted founders.

Both sides are blaming each other for a dramatic decline in Superdry's fortunes after a more than 70 per cent share price plunge wiped £1.2 billion ($2.2b) off the company's value over the past 12 months.

Much of the blame has been pinned on a lacklustre Autumn/Winter 2018 range.

Former chief executive and co-founder Julian Dunkerton stepped down in March last year citing "other demands on his time", but has recently begun speaking out about the retailer's "misguided strategy" under current CEO Euan Sutherland — prompting a vicious response.

Dunkerton, who co-founded the business from a Cheltenham market stall with James Holder in 2003 before floating the company on the London Stock Exchange seven years later, now wants to return to the board as brand and product director.

The pair still jointly hold just under 30 per cent of the company's shares. They have triggered an extraordinary general meeting on April 2 for a vote on Dunkerton's return, alongside Boohoo executive Peter Williams.

"All shareholders in Superdry are continuing to suffer as a direct result of the current misguided strategy," Dunkerton said in a March 1 statement. "We have all waited and suffered long enough — the time to act is now."

In a scathing letter to shareholders this week, Superdry's board urged shareholders to vote against the proposals.

It warned the former CEO's return would be "divisive" and distracting, "damage morale" and lead to a "dysfunctional relationship between Dunkerton, the board, the CEO and wider management team".

"The board unanimously believes that Dunkerton's return to the company, in any capacity, would be extremely damaging to the company and its prospects," the letter said.

"Julian Dunkerton, as the company's brand and product director (the role he wants to return to), had prime executive responsibility for the design direction, range selection and range build of the Autumn/Winter 2018 range, which contributed to the company's underperformance in FY19."

The letter said Dunkerton's views had "not evolved with the needs of an increasingly international multichannel brand business" and he would "return to a narrow and concentrated range mix, high option count, and low rate of sale model".

Outlining the failures of the Autumn/Winter 2018 range, the letter said it was "representative of underlying issues in the approach to product and innovation" identified by the board in the lead-up to Dunkerton's departure.

They included an "over-reliance on graphic legacy-style sweats and jackets that had not embraced innovation and the impacts of warming climactic conditions and had relied on overembellishment and over-branding".

It also cited "too many underperforming options with only small differences (such as the) same product in different colours or with a different logo", under-representation in "higher-growth categories such as active, dresses, denim and premium" and "no options in high-value categories like children's wear and licensing".

"Further reflective of Dunkerton's divisive style and misaligned leadership style, he has failed to accept any accountability for the Autumn/Winter 2018 range, even going as far as to claim that he had had no involvement despite extensive and detailed evidence to the contrary," the letter said.

It went on to say that "many of Dunkerton's and Holder's views" were "not supported by statistically reliable data" and were "largely without factual basis or merit".

"Dunkerton's entrepreneurial leadership style is not, and was not, capable of being scaled to meet the needs of the company and led to significant dysfunction when he was brand and product director," it said.

"The company has evolved in terms of culture and values over the past four years, and particularly since Dunkerton left the Company, a more collaborative and open-minded way of working has been further embedded."

The letter added that it was "clear to the board, based on its observations of Dunkerton's behaviour and attitudes, observed in both an executive capacity and at the board itself, that he is unsuitable for a non-executive role".

Dunkerton has not yet responded to the board's letter.