Julian Dunkerton, the founder and former chief executive of fashion chain Superdry PLC (LON:SDRY), has been re-elected to its board of directors by a razor-thin margin in an emergency general meeting on Tuesday.
Dunkerton, who set up the company in 2003, and with co-founder James Holder, controls around 29% of the company shares, convened the meeting in early March with the aim of re-appointing himself to the board while also bringing on Peter Williams, the chairman of online fashion retailer Boohoo Group PLC (LON:BOO).
In a nail-biting finish, shareholders approved Dunkerton's return in a vote of 50.75% in favour and 49.25% against, while Williams was also elected to the board with 50.74% of the votes in favour and 49.26% against.
READ: Superdry founder Julian Dunkerton vows not to sell stake if he is voted back on the board
Dunkerton previously said that “urgent action” was required to address the sharp decline of the company’s share price, which has fallen around 65% in the last 12 months and seen the firm demoted from the FTSE 250.
He blamed the deterioration on the “misguided strategy” of the current board and that after having proposals rebuffed privately for several months, there was “no choice but to let shareholders decide the best outcome”.
Dunkerton had also vowed not to sell any of his stake in the company for two years should he be re-appointed.
“Fundamental” disagreements
Dunkerton quit as a director of the company around a year ago over a “fundamental disagreement” about future product design and the company’s international expansion plans.
Since his resignation, the company and its shareholders have suffered two profit warnings and a weak set of third-quarter results in early February, as well as being the only retailer among its peers to report a fall in online sales for the autumn/winter period last year.
He has also taken swipes at the incumbent management, noting that current chief executive Euan Sutherland’s pay packet was £3.2mln last year despite the firm also announcing a £20mln cost-cutting drive.
Mass resignations predicted
Dunkerton’s re-election marks a significant defeat for Superdry's current board, who previously threatened to quit en masse if he was reinstated.
In a statement on 14 March, the board said Dunkerton’s return would be “extremely damaging”, with chairman Peter Bamford saying the issues he raised had already been addressed.
“There is little new information and no clear articulation of the proposed strategy or action plan,” he added.
READ: Superdry looking to cut about 20% of jobs at its head office as struggling fashion brand attempts to rein in costs
Superdry’s bosses have also dismissed Dunkerton’s proposed sales strategy and criticised his leadership, claiming he had “prime responsibility” for the autumn/winter 2018 range which didn’t sell very well.
The group has also announced plans to cut around 20% of the jobs at its head office in order to rein in costs and fight off Dunkerton’s insurgency.
Incumbent CEO "likely to leave", says broker
In a note to clients, analysts at broker Peel Hunt had said that following Dunkerton's re-appointment, Sutherland was "almost certain" to leave the company along with creative director Phil Dickinson.
They added that over the first 90 days, the company's kidswear range was "certain to be cut" as well as the likely rushing out of a number of ready-to-go product ranges.
"We believe Julian needs to drive a more fundamental refresh of the core ranges," analysts said, adding that this may take a few seasons to deliver.
"Regardless of the outcome of today's vote, we had felt that numbers would remain under pressure ahead of the autumn. That view hasn't changed, although the immediate impact of Julian's return is likely to be additional costs as he rebalances the business and seeks to reinvigorate the product."
In early afternoon trading on Tuesday, Superdry shares were down 3.2% 530.5p.
-- Adds broker comment and updates share price --