Growing Pains

“Expansion is not always as easy as it seems.”

Super Group, the international clothing retailer behind the Superdry clothing brand, is hiring some experienced management to help it continue to grow. A former managing director at TK Maxx will be its first chief operating officer and Habitat’s ex chief operating officer is going to become the finance director, so that the founder and CEO can spend more time developing the Superdry brand.

One of my more visual handy tips for aspiring masters of the business universe is “Remember Agincourt”. There is a lot that a business can learn from Henry V, much of which I will save for another time, but for those of you who have seen any of the films of this great event showing the arrows from the English longbows relentlessly raining down on the French you will remember that they were all somewhat aligned. Alignment is a much underrated business discipline and you would be surprised just how many businesses are all over the place.

Whatever you think of the Superdry brand it has been very successful. The company was, at one time, something of a stock market darling but not now, in these more difficult times for retail. A profits warning in October didn’t help. Things like problems with stock systems and not having enough stock in stores but too much inventory elsewhere don’t give investors confidence that you can cope with being any bigger. With scale comes a realisation that it can be very costly if you get this alignment thing wrong.

In January, the company indicted that it expects to deliver around £50 million profit for the year, so the problems aren’t catastrophic. And clearly the business has enough going for it to attract people experienced at managing a bigger business. They say you should dress for the job you want not the one you have and a similar epithet applies to management: you need to know how to manage the business you are growing into, not the one you have just grown out of. Otherwise you are in danger of being caught out by one of my other guiding principles as you suffer from “not knowing what you didn’t know”.

I’d say it was pretty much a housekeeping task to manage the end-to-end supply chain in international retail such as this with some degree of efficiency, so these appointments make a lot of sense. However, the ongoing value of the Superdry brand (and the company) will more directly reflect how well the brand is managed in the minds of its target audience, something that seems to have gone pretty well so far. With fewer distractions you might hope to see its performance and share price improve.

Super Group’s growing pains are a great example of just how difficult it can be to keep things aligned as you get bigger particularly if operating on this scale is new to you. While it may seem an obvious problem it is very common for it to get out of hand.

Mark

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