For a time it seemed as if the only way was up for British fashion brand Superdry. However, events since Christmas have led to suggestions that the pseudo-Japanese range might be suffering from overexposure for the first time.
After a successful Christmas, in the last three weeks of January like-for-like sales were down 3%, with this year's profits expected to hit a bottom-of-market low of £50m-£54m. As a result, its share price has taken a hit.
Its parent company, Supergroup, is a strong contender in the fashion category. It comprises three main brands, Superdry, skating range 77Breed and SurfCo California.
Superdry was founded in 2003 by Julian Dunkerton and James Holder, founder of the Bench brand.
Superdry's products are sold in more than 91 countries across Europe, Asia, Australia and the Americas, and its popularity dominates the group's retail business.
Dunkerton remains optimistic, stating that an overhaul of sourcing arrangements means the group will be able to deliver better-quality clothing at higher profit margins, resulting in lower prices for shoppers.
The company remains on target to add 20 UK stores this year, and is reviewing its plans for further growth in 2013.
Meanwhile, rival brands such as Jack Wills have discounted products in the past two months, and Superdry retains a strong celebrity following, from Jamie Oliver to Dannii Minogue.
Nonetheless, is its recent sales slump evidence that the brand is in need of a reinvention?
We asked Jim Prior, chief executive of The Partners, also a co-founder of fashion label Duck and Cover, a former director of product and marketing for Converse and ex-head of merchandise for Levi Strauss UK, and Raoul Shah, chief executive of creative agency Exposure, which works with Nike, Umbro and Calvin Klein.
Diagnosis
Two Industry experts advise on how superdry can remodel its prospects
Jim Prior, chief executive, The Partners, Duck and Cover founder, ex Levi's, Converse marketer
It is illogical to expect a fashion brand to keep growing ad infinitum. Disappointed shareholders who have failed to understand that should berate themselves, not the company in which they chose to invest.
What the brand has achieved in its short lifetime is remarkable, and we should celebrate the heights to which it has risen, rather than criticise it now that a peak has come into view.
The task now is to ensure that the dip is as shallow and short-lived as possible. It's a time for level-headedness, not panic, and for a pragmatic, yet progressive, view.
Superdry needs to discover some new cachet. Now that people think they know what to expect from the brand, it's time to wrong-foot them. Add a dimension to the brand story. Go underground a little. That's the beauty of the industry – you can, and are expected to, reinvent your brand.
However, the ebb and flow of fashion is a fickle dynamic. Sorry, dear shareholders; no matter how brilliant anyone's recommendations, you may still need to take a long-term view.
Remedy
- Cut 30% of the SKUs in the range. Redeploy the resources into an innovative, high-end, new line.
- Brand the product more subtly, more wittily. Conversely, ramp up the intensity of the retail experience.
- Push the online experience harder. Make it more interactive and add more fun to the shopping process.
- Have a party to celebrate years of success. There's more to life than share price, as we all, by now, ought to know.
Raoul Shah, chief executive, Exposure, which works with Nike, Umbro and Calvin Klein
Superdry launched with a good business model, having been successfully created from the retail base of Cult Clothing, the owners' other brand interest.
The challenges and shareholder caution it now faces reflect many traits in the wider industry: over-distribution, discounting, an ever-changing fashion environment and fickle consumers.
The twin peaks of fashion status and celebrity endorsement have served the brand well, but it needs to build deeper roots to maintain a sustainable and relevant brand.
While the product is strong, branded and easily recognisable, the visual image is no longer distinct and could easily be mistaken for other high-street brands.
The branding is its key distinguishing feature, as seen across so many streets and football terraces – but that's why the brand's equity is being put to the test. The brand image needs a boost.
Remedy
- Superdry's online business is alive and well, but its approach to social media could do with a total revamp. At present, it's too corporate and has no real point of view about anything.
- Establish more premium products to re-engage in higher-end distribution – the brand is in danger of falling deeper into the 'middle market' from where there's only one way to go (and it's not up).
- Revisit the original Japanese and US inspiration and establish a bigger foothold in influential cities that are centres of fashion such as London, Tokyo and New York.