UK fashion retailer Superdry faces a potential collapse without launching a comprehensive restructuring plan and delisting from the London stock market, the company warned. The move sent its shares plummeting by over 25%.
Seeking to stay afloat and secure vital funding, the struggling chain aims to negotiate rent reductions on 39 of its approximately 100 UK stores. The update released on Tuesday also reveals a planned equity raise of up to £10 million, fully committed to by co-founder and CEO Julian Dunkerton.
Dunkerton, holding a 26% stake in Superdry, recently dismissed a full company buyout. Superdry believes implementing these drastic changes away from the scrutiny of public markets is its best course of action.
A forthcoming shareholder meeting will determine approval of the three-year plan. Investors will choose between participating in an €8 million fundraise (underwritten by Dunkerton) at 1p per share or a £10 million placing open solely to Dunkerton at 5p per share.
Superdry's stark warning states that failure to implement the restructuring plan will force the company into administration, along with other entities within the group. Shares tumbled nearly 30% in Tuesday morning trading, leaving Superdry with a market capitalisation of just over £5 million – a dramatic decline from its £400 million valuation at its IPO in 2010.
The retailer, once thriving and even enjoying celebrity endorsements, has grappled with declining demand and financial difficulties. Dunkerton believes Superdry is among the last UK retailers taking this restructuring path, echoing similar successful efforts by brands like AllSaints and Fat Face. He views the decision as critical to safeguard jobs.
Going private, Dunkerton argues, would reduce costs and allow him greater emphasis on reinvigorating the product line. Superdry reports support from key lenders Hilco and Bantry Bay.
"This is a pivotal point for Superdry," Dunkerton states. "These proposals seek to stabilize the business after unprecedented challenges. My love for this iconic British brand remains unwavering."
