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UK fashion retailer Superdry has warned it could go bust unless it launches a sweeping restructuring plan and said it would delist from the London stock market, sending its shares down by more than a quarter.
The chain is seeking rent reductions on 39 of its about 100 UK stores to be able to stay afloat and secure emergency cash, as it tries to return to a “more stable footing”.
The company said in an update on Tuesday that it was looking to launch an equity raise up to £10mn and said that co-founder and chief executive Julian Dunkerton had committed the full amount. Dunkerton, who owns a 26 per cent stake in the company, last month ruled out making an offer for the entire group.
Superdry said on Tuesday it would be best “to implement these changes away from the heightened exposure of public markets”. There will be a shareholder meeting to approve the three-year plan in due course.
Investors will have the option to participate in a fundraise of €8mn at 1p per share, with Dunkerton underwriting it and Superdry receiving the full amount, or a £10mn placing at 5p per share, that would be open to only to Dunkerton.
Superdry said: “Unless the restructuring plan comes into effect, it will need to enter administration and other companies in the group will need to enter into administration or an equivalent insolvency process.”
Shares in the company fell almost 30 per cent in morning trading on Tuesday, giving it a market capitalisation of just over £5mn. They are down more than 90 per cent over the past year.
The retailer, which started life in a Cheltenham market stall in 1985, listed on the London Stock Market in 2010 in an initial public offering valuing it at £400mn.
Its popularity was once boosted by unsolicited celebrity endorsements from the likes of footballer David Beckham and singer Shakira but it has since been struggling with weak demand and a cash crunch.
Dunkerton said in an interview that other UK brands such as AllSaints and Fat Face had implemented similar restructurings successfully and Superdry was “one of the last [retailers] to do it”.
He said it was a necessary decision that would save jobs. He added that taking the group private would also save it money and free up time for him to focus on retailing and new products.
Superdry said its main lenders Hilco and Bantry Bay were supportive of the changes.
Dunkerton said it was “a critical moment in Superdry’s history”, adding: “At its heart, these proposals are putting the business on the right footing to secure its long-term future following a period of unprecedented challenges.
“My passion for this great British brand remains as strong today as it was when I founded the business,” he said.
