- Superdry needs to strengthen balance sheet
- Founder Dunkerton to support fundraise
- Shares down more than 30% year-to-date
Embattled fashion brand Superdry’s (SDRY) shares ticked up 0.75% to 86.75p after the lately-unloved clothing retailer confirmed it is in ‘positive discussions’ with investors over an equity raise of up to 20% of its share capital as the cash-strapped company seeks to strengthen its balance sheet.
Responding to press speculation surrounding a potential fundraising of around £15 million, Superdry said talks are underway with ‘certain institutional and other investors’.
The Cheltenham-based clothing firm’s founder, CEO and largest shareholder Julian Dunkerton plans to ‘significantly participate’ in the fundraise and provide a ‘material underwriting commitment, reflecting his confidence in the long-term prospects of the business’.
BOLSTERING THE BALANCE SHEET
Today’s fundraising update follows the announcement (25 April) that Superdry’s lender Bantry Bay had agreed to increase the borrowing availability level under an asset-backed facility until Superdry completes the £40.7 million sale of its Asia Pacific intellectual property assets to South Korea-listed Cowell Fashion (033290:KOSDAQ).
Dunkerton insisted the agreement with Cowell offers the Superdry brand ‘a fantastic opportunity to expand its global reach, whilst providing additional funding to help deliver our turnaround programme in the face of the challenging consumer landscape. I’m absolutely thrilled by the opportunity to work together with Cowell to create inspiring products consistent with our brand heritage and build out across the APAC market.’
BUT IS THE BRAND WASHED UP?
Last month (14 April), hard-pressed Superdry withdrew (14 April) its ‘broadly breakeven’ full year 2023 earnings guidance and blamed the cost-of-living crisis and poor weather for disappointing retail sales in February and March.
Weather is an excuse which, however valid, rarely washes with investors. ‘Wholesale performance continues to lag the rest of the group, although we are making progress in working with our partners to support their recovery,’ stressed Superdry.
Shares in Superdry are down more than 30% year-to-date as investors price-in challenging high street conditions and the uncertain prospects of a successful turnaround.
While Dunkerton’s belief in the Superdry brand is said to be ‘stronger than ever’, the share price suggests the brand is no longer as relevant as it once was.
