SuperGroup proves to be fashionable
Ex-barrow boy and SuperGroup chief Julian Dunkerton has a rags-to-riches story and entrepreneurialism in his blood, writes Manfreda Cavazza.
Julian Dunkerton: The ex-barrow boy who says he's a 'bit of a leftie' cashed in £81m following the SuperGroup float
Julian Dunkerton looks exhausted. The chief executive of fashion business SuperGroup has been awake since 4am, travelling from his home in Gloucestershire to London to present the firm's first set of profits since it floated in March.
Judging by the dark circles under his eyes and his dishevelled hair, it has not been the easiest of days.
The fact that shares in SuperGroup, which owns the trendy Superdry label, fell 11% yesterday is not helping.
But after a cigarette and a triple-shot cappuccino, Dunkerton is back on track; enthusing about the business he started aged 19 from a condemned shop unit in Hereford and which was valued at £400m when it made its debut on the London Stock Exchange in March.
Many were sceptical about the listing. At the time, the sale of discount chain Matalan and the float of fashion retailer New Look had both fallen by the wayside. So when SuperGroup, a relatively unknown young fashion chain, came along selling a bullish growth story investors were understandably wary.
Yet the share price performance since the flotation has been nothing short of phenomenal. Even after yesterday's drop, the share price has almost trebled since its debut at 500p. It is by far the most successful float of 2010.
So does Dunkerton feel vindicated? 'Of course I'm delighted the shares have been so well received. They were priced to make sure everyone could do well out of the investment,' he says.
He explains the purpose of the float was to raise cash to take the business to the next level of expansion. He felt it was right to invite City investors to grow with him. 'People didn't understand how big we could become. We wanted to come to market with all the growth yet to be had,' he says.
It is not just investors who have done well out of SuperGroup. The listing made Dunkerton, who describes himself as a 'bit of a leftie', a multi-millionaire. He cashed in £80m following the float and retained a 30% stake, which even after yesterday's share price slump is worth more than £350m.
Not bad for a former barrow boy. Dunkerton's story reads like a classic rags-to-riches fairytale: his parents left London when he was 14 to set up an organic cider farm in Herefordshire. Dunkerton himself had little clue about what to do with his life.
He decided to become a doctor, but achieving three Es in physics, biology and chemistry A-level quickly put paid to that idea. So he opened a shop, selling clothing he bought in London and lugged back to Hereford on the train in big bin bags. He made £16,000 in the first year and hasn't looked back since.
Rag trade to riches: Dunkerton started out lugging clothing in binbags on the train from London to Hereford - but later co-masterminded trendy brand Superdry
At this point Dunkerton realised the only way to grow further was to create his own label, enabling him to generate bigger profits.
In 2003 he teamed up with designer James Holder, the man behind fashion brand Bench, and together the pair came up with Superdry. The clothing, mostly aimed at men, is inspired by American retro fashion. Trademark products include jeans and checked shirts, but there is also a Japanese influence in its T-shirt and hooded top designs.
Dunkerton says the success of the brand, which competes with the likes of Jack Wills and Abercrombie & Fitch, is largely down to the quality of the fabrics.
He rubs the Superdry jeans he is wearing - which look a bit odd teamed with a corporate suit jacket - to demonstrate the quality.
'We're not about fast fashion. People keep coming back because they just fall in love with our classic products.'
He says he is the type of retailer who 'lives and breathes' his business, preferring to be on the shop floor than in the boardroom, although he also appears comfortable with being under the scrutiny of the City.
However, he is perhaps a little too flippant when he dismisses yesterday's share price slump as a 'massive overreaction' by investors who took fright from comments he made about the rising price of cotton.
Dunkerton admits this will slightly erode profit margins in the year ending April 2012, but insists it is a 'tiny blip' and does not suggest the company has run out of steam. He adds: 'I only see growth for this business. There is so much more to go for.'
The Superdry chain is expanding rapidly in the UK, overseas and on the internet. Women's clothing is a fourth major area of growth.
Dunkerton says there is potential for at least 150 stores in the UK, up from 55 currently. It has 53 overseas stores, including in America, Australia and Dubai, and there are plans for more in Denmark, South Korea and Venezuela.
Online sales, which currently make up around 4% of revenues, could eventually represent 20%, he says. And women's clothing could grow from around 37% to 50% of total sales.
That the clothing is a hit with the 20-somethings of today is clear in the figures. Profits trebled to £26.5m in 2010. Analysts expect pre-tax profits to grow 40% to £43m in 2011 and hit £61m in 2012.
One thing in SuperGroup's favour is it sits in the relatively recession-proof young fashion market. For the time being at least, SuperGroup is firing on all cylinders.
Dunkerton cannot contain his glee when I ask how trading is going in the run up to Christmas. He laughs and says: 'We're more worried about how to manage the queues at the till.' While clearly passionate about his job, Dunkerton insists he is not a workaholic. He used to love fishing, but gave that up to spend more time with his two young daughters.
But entrepreneurialism is clearly in his blood. He adds: 'The luckiest thing for me was finding out what I was good at aged 19.
'That government grant I got when I started Cult was probably one of the most important moments in my life. I lived off the grant and invested all my money back into the business.' This habit of saving has stuck with him ever since. Supergroup listed with virtually no debt and today is in the black by £20m.
He seems a little uncomfortable about his eye-watering wealth.
When asked what drives him, he says: 'I just love seeing a business grow. I'm not a big spender, I'm not really driven by money.'
So much so, Dunkerton claims he hasn't spent a penny of his flotation windfall on himself. He has bought his brother a house and plans to buy some land for his parents so they can grow their cider business.
His family should be able to afford to raise a glass of something a little more luxurious than that this Christmas.
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