Chas Howes will open the FD Surgery London on 1 May 2018. When caught up with him to ask a few questions about his time as Chief Financial Officer at Superdry . . .
How did you end up working for Superdry?
After an early career working for large blue-chip organisations (Cadbury, Raleigh, Plessey, Grand Met, Debenhams, Burtons), I embarked on 16 years in the alcohol industry (a very good place to be!!) working for United Distillers, Guinness, Diageo, Allied Domecq and Fosters Wine Estates. I was then on the wrong end of an acquisition and found myself at La Senza for a 6mth interim contract.
As I was leaving the head of FP&A at La Senza emailed me about a FD role for a small retailer he had been approached about, and was I interested. The role was in Cheltenham where we happened to live, and I thought this was not the same as the companies I had worked for before. My wife gently reminded me that I had nothing else on and so I went for the interview and, as they say, the rest is history!
What was the appeal of the business for you?
Given how I ended up there it is safe to say there was little early appeal actually!! However, when I met Julian Dunkerton, the founder, who I found to be hugely impressive, approachable and charismatic, with a real passion for the brand, there was little choice but to say yes. The appeal grew further after a two-hour guide round the design studio during this first interview where he talked me through how the brand was created and what they do to keep it fresh and relevant. If you look at my career there is a common feature of all the companies I have worked for; Brands. Superdry was very clearly a brand with huge potential and the thought of being a part of it was very exciting and enticing.
At the same time, the business was looking for a part exit to a PE house or trade partner and the thought of getting this experience on my CV would certainly fill a gap.
What was the fundamental growth strategy during your time at the company?
It probably wasn’t very clear and certainly not documented or inculcated throughout the organisation, so I set about defining it and communicating it to the business and to the external world as part of our stakeholder management to those who might want to buy a stake in the business. There were 4 parts:
1. Expand UK retail estate from 25 stores to c. 130 stores by opening 20 stores per year, focused on key shopping centres, and towns and cities in the top 30 retail economies in the country.
2. Expand overseas by choosing partners carefully that demonstrate good retail experience, cover a whole territory and have existing partnerships with other retailers. At the same time, it was recognised that the type of partner will grow as you penetrate the market. For example, initially it might be a third-party distributor and end up over a number of stages with owned retail across the market similar to the UK.
3. Grow the brand by evolving and expanding key clothing categories (e.g. Jackets and T-Shirts) and launching into new categories (e.g. Luggage, Sunglasses), expanding f womenswear from 33% to 66% of sales.
4. Expand the proportion of internet sales from 3% of Group turnover to 20%. In part this will be achieved by making the full range available online in the UK and by launching local language websites overseas, acting as an advance party to developing land-based distribution. In so doing brand awareness will improve and support for partners in a particular market will be enhanced.
What were the biggest challenges you faced?
As you can imagine there were many! The top three that kept me occupied were probably:
1. Firstly, defining a role for finance in a business where credibility and impact were poor. It meant a total realignment to mirror the organisation’s structure and significantly enhancing capability.
2. Only I had Plc. Experience at Board level. The other 4 were focused on retail, brand, overseas expansion and corporate governance. What this meant was that I picked up all other functions (Finance, HR, IT, Logistics, Supply Chain) and being stretched across many departments I had to change the way I managed the team. Essentially, I would define their roles, let them get on with it to the point where they were “in the deep end”; but the key difference is I would let them “sink but not drown”.
3. Supporting the CEO. He had a particular management style and wasn’t interested in IT, corporate governance and had what could be described as a “spider’s web” hierarchy. By this I mean that anybody who worked in the organisation (i.e. they were on the spider’s web) only had to get permission from the CEO to be able to do anything. Consequently, much of my role was spent sweeping up after him as he drove the business forward.
What are you most proud of regarding your time with the business?
Interestingly enough, it was at 07:59 on the morning of 24th March 2010. I was sat in our broker’s office and saw the first trade of our newly listed share go through the London Stock Exchange at 08:00. This single moment represented the culmination of my finance career. At Superdry, I was lucky enough to get a chance to take a company to market – I won’t get another chance (and certainly don’t want one!!)
Incidentally, that first trade went through at £4.99, a 1p discount to the listing price. From there the share price went north, trebling in 12 months and achieving FTSE250 status together with IPO of the year.
What would you say was your biggest mistake / regret?
Not driving infrastructure development up the agenda. Towards the end of my career at Superdry we tried to implement a new warehouse system which had interfaces that failed between other systems. Essentially, we missed Christmas that year which, for a retailer, where c. 40% of profits are generated in a 6-week period, is a serious issue!
The key point though is that we focused too much on the external world (brand, consumers and stores) and didn’t pay enough attention to the internal world. If you imagine your business as a balloon, then it needs air pressure (“infrastructure”) to be increased as it grows. If it loses pressure it is likely to implode! That is broadly what happened.
What do you believe are the key qualities required in a good FD?
Firstly, finance and accounting expertise is a given. Thereafter it is more about who you are, how you behave and how you lead a team. For me though a good FD needs to be able to do the following (in no particular order!):
- Make decisions in ambiguous circumstances based on a blend of facts and intuition
- Make up your mind quickly
- Don’t interfere with others, trust them to do their job
- Have respect for other members of the team and be prepared to muck in
- Provide air-cover for your employees, particularly those that work for you, giving time to all, no matter which department they work in
- Recruit, reward and retain the best
- Think clearly under pressure
- Plan and anticipate for things to go wrong
- Communicate clearly and succinctly to all levels
- Demonstrate excellent interpersonal skills
- Understand your role and how to sync with the CEO
- Orchestrate a large team with multiple agendas
- Clarify the strategic direction of the organisation and communicate clearly and succinctly across the business to engage and align teams.
I am sure there are many more but that’s probably enough for now!
How do you see technology impacting the finance function and the role of the FD?
There is absolutely no doubt that the impact of technology will have a massive impact on the function. There is a huge opportunity for greater analysis of data, more automation, electronic processing etc etc. At the same time the business will be able to identify target markets, at the level of an individual, and design bespoke, very cost-effective communication using social media. For example, a small organisation in Cheltenham is now able to send “buy now and get 10% off” messages direct to individuals who are browsing on their website.
However, for me, the biggest impact will be on the type of person required to work in finance and how they operate.
In general finance is exceptionally good at paying attention to detail, being numerate, analysing data to draw conclusions and reporting to the wider organisation.
So, as the nature of work changes (i.e. less paper processing) there will be a need to leverage these skills and recruit more analysts, planners, strategists, and those with overall business acumen. Many other functions do not have these skills, so it is possible that finance, combined with business capability will be the CEO’s of the future.
Chas will be revealing “what can and did go wrong” in a refreshingly honest assessment of mistakes made and lessons learnt at The FD Surgery on 1 May 2018.