SuperGroup, owner of the Superdry fashion brand, has just announced plans to support future growth with a new 500,000 square feet distribution centre as part of the company’s next major phase of development.
At its interim results presentation on 12 December 2012, the group noted that its existing retail distribution configuration, whilst fit for purpose for the immediate future, is inadequate to support medium- to long-term capacity requirements.
Supergroup will therefore invest around £5 million in the new centre, which, after the initial set-up and transition phase, is expected to generate significant cost savings and help improve the company’s operating margins. The business is hoping that this improved operating capability will help support its planned growth for at least the next five years.
Such positive news may come as a surprise to the SuperGroup sceptics out there. For the last couple of years, it seems like everyone has been waiting for SuperGroup to fail. However, the company appears to be holding its position with consumers and extending its product range beyond the denim and t-shirts that originally propelled it to fame, with plans to launch a new women’s wear assortment and, through collaboration with British tailor Timothy Everest, a range of tailored suits, jackets and overcoats for men.
In order to prepare for these developments, the company is currently working very hard to put robust systems and processes in place that will enable it to meet its increasing sales ambition. Seen in this context, the company’s new distribution centre is actually just another piece of this same jigsaw - a way of shoring up its operations in order to support further growth, help the company to fulfil the increasing demands on its e-commerce and aid its multi-channel expansion.
CEO Julian Dunkerton has surrounded himself with a very strong team in order to ensure that changes like these happen.
This involved taking some bold and brutal steps to ensure that he has the best possible people around him - as well as the high-profile loss of some the company’s founders. The decision to acquire a prominent Regent Street location - the most prestigious Superdry store to date - was another bold move that has really paid off.
On the face of it, these seem to be the marks of a sound business. It’s worth noting that the profit warning that sent its share price spiralling 40% in one day last year wasn’t actually linked to poor trading; it came about as a direct result of the retailer uncovering an accounting error in its forecasting.
Even so, many of those in the corridors of power have been whispering about the company’s imminent demise for a while now, leaving SuperGroup to ignore the nay-sayers and focus on its customers’ needs and building the brand instead. So, whilst others have been waiting - in some cases eagerly - for the company to topple, Mr Dunkerton and his team have remained steadfast in their commitment to making operational and efficiency improvements that will support continued growth for the next five years and beyond.
It’s an inspiring, rather than cautionary, tale. At a time when so many British brands are failing - both at home and overseas - it’s odd to think that there are executives out there rubbing their hands together at the prospect of yet another retailer sinking to its knees. This sour grapes attitude will be of no benefit to anyone and instead, we should all be celebrating the accomplishments of SuperGroup as a UK success story.
- Dan Coen, director, Zolfo Cooper