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The Superdry Story: what can – and did – go wrong

For most people, Superdry is synonymous with the Great British entrepreneurial success story. What began at a Cheltenham market store in the early eighties, has become a FTSE 250 apparel superbrand, generating annual turnover of over £590m. For the company’s former CFO, however, the tale is bitter sweet.

Chas Howes oversaw the company’s most aggressive period of expansion, with the total number of stores growing from a handful to over 200. Such meteoric growth brought its own set of challenges, as Chas explained to the 120+ FDs who gathered at FD Surgery Manchester last week, not least transforming a finance team that consisted of one qualified accountant, one part-qualified, two clerical, one part-time and a dog!

This was a finance team with no published management accounts, no financial planning, no financial controls and little credibility. Chas’s job was to create a finance function that fit a unique business culture and brand. “It was all about implementing structure, process and controls, without compromising creativity,” he explained.

But this was sometimes easier said than done. Superdry founder and CEO Julian Dunckerton is a superlative entrepreneur but sometimes process wasn’t at the top of his priority list. The local pub served as both recruitment agency and boardroom and Chas was frequently faced with reposts such as “I don’t care about the paperwork. Just get the stock out to the stores.”

Chas created a finance structure that reflected the business’s own organisational structure, with an FD in retail, wholesale and corporate. And as a stretched CFO he developed a certain management style by necessity. “My ethos was I would let them sink, but I wouldn’t let them drown.”

The transformation of the finance function garnered many successes, from the basics – establishing monthly board meetings – to a focus on slow moving stock that had a great impact on cash and which led to establishing outlet stores. But, as ever, not everything went smoothly. There was an incident involving a £300,000 spend on footfall counters that passed him by and a punitive forex hedging play.

But Chas’s biggest challenges began when Julian announced, one October morning, his intention to float on the LSE. Not only was the company far from ready for life as a plc, but Julian wanted to list by the end of February. “That was four and a half months for a process designed, at the best of times, to take far longer,” Chas recalled. “And we were a retailer with Christmas slap bang in the middle.”

Understanding the regime for reporting and communicating business performance was the first task. As a ferociously proud entrepreneur, Julian, in particular, was prone to saying things that he shouldn’t. Chas recalled another situation where a proactive analyst turned up at Superdry’s not yet open Regent Street flagship store to extract information from the builders and another when Julian publicly announced his intentions to open stores in Germany, out of the blue. “In the end, I would give him a one-pager with four sentences on it, and say, ‘these are things you can say’.”

Further trouble came with a core system roll out kickstarted in September. The idea was to shift from paper-based to state-of-the-art but the launch date was a mistake. “To launch on September 1 was madness,” Chas recalled. “It didn’t work. Stock was frozen. The wrong sizes were in store. We missed Christmas and we missed the post-Christmas sales.” This was exacerbated by one of his FDs missing forecast, unexpectedly and by a long way.

The ultimate result was three profit warnings and Chas himself getting fired. “They had to fire me and they did,” he explained, adding that it took him a long time to regain his self-confidence. Today Chas is a charity trustee, angel investor and entrepreneur. “It is therapeutic to tell my story,” he said. “And I like to show others that there is light at the end of the tunnel.”

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