Why is Superdry Delisting?

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Published by Shwetha Sivaraman at August 18, 2024

Article by Jaspreet Bassi

Superdry is a British clothing company that sells products that traditionally combine vintage American styling with Japanese-inspired graphics.

Superdry used to be a popular brand, but it has been struggling as sales have decreased. The company has explained that the decrease in sales has been due to consumers cutting back on spending due to the cost-of-living crisis and poor weather, negatively impacting demand for its spring-summer collection. However, other companies, such as Primark, have shown strong results, so what has happened with Superdry? Retail Gazette explains that the brand’s high prices have hit it disproportionately during the cost-of-living crisis. They suggest that Superdry should emphasise in their marketing that Superdry provides high-quality and versatile products to help shoppers realise that what they buy is good value for money. Superdry has taken this advice on board by looking at its product offering and pricing it sensibly, but despite this, it is still struggling financially. For example, its share value has fallen by over 97%, so it is now worth £3 million. As a result, Superdry now wants to restructure its business and to do so, it wants to delist from the London Stock Exchange.

It is opting to delist because it wants to implement its restructuring plan without regulatory pressure. Superdry going private may be beneficial. For example, management can retain control over business decisions and strategic direction without answering to public shareholders or worrying about share price. Going private also removes the pressure of detailed annual financial reports mandated by the stock exchange, freeing up time and cost for management. Superdry can devote more resources to research and development with fewer regulatory requirements. However, there are drawbacks to Superdry going private. For instance, Superdry may have to rely on private equity, which may be erratic and competitive. Private investors are heavily involved with the running of the business and participate in key strategic decisions alongside management. Furthermore, there is a high level of financial risk when private, especially if Superdry has considerable debt during the privatisation process. The high debt levels may make it difficult for Superdry to fund capital expenditure. Despite this, going private may enable Superdry to make significant financial gains, and the fewer regulatory and reporting requirements will enable Superdry’s management to have time and money to focus on strategic direction.