Superdry CFO: My biggest mistakes and accomplishments
9 min read
09 May 2018
When you're the CFO or FD of a company, then planning for growth will be a key priority. Chas Howes, former head of finance at Superdry, sets out what his goals were for the company – and what he would change if he could turn back time.
Chas Howes shared a refreshingly honest assessment of mistakes made and lessons learnt in his keynote address at FD Surgery. Here are the highlights.
Under the helm of Chas Howes, Superdry grew from £41m in 2008 to £314m in 2012. His strategy saw the company listed on the London Stock Exchange in 2010 – and within a year it achieved FTSE 250 status. With such achievements under his belt, Real Business asked Howes how he planned for growth at Superdry – and what hurdles he jumped in the process.
How did you end up working for Superdry?
After an early career working for large blue-chip organisations, I worked in the alcohol industry for 16 years. I was then on the wrong end of an acquisition and found myself at La Senza for a six month interim contract. As I was leaving, the head of FP&A there emailed me about a FD role for a small retailer. The role was in Cheltenham, where we happened to live, so I went for the interview.
What was the appeal of the business for you?
Given how I ended up there it is safe to say there was little early appeal. However, I found Julian Dunkerton, the founder, impressive, approachable and charismatic. He was passionate about the brand and there was little choice but to say yes. The appeal grew further after a two-hour guide round the design studio, where he told me how the brand was created and what was being done to keep it fresh and relevant.
If you look at my career there is a common feature of all the companies I have worked for: brands. Superdry had huge potential and the thought of being a part of it was enticing. At the same time, the business was looking for a part exit to a PE house or trade partner – I wanted that experience on my CV.
What was the fundamental growth strategy during your time at the company?
It probably wasn’t very clear and certainly not documented or inculcated throughout the organisation. I set about defining it and communicating it to the business and to the external world as part of our stakeholder management, to those who might want to buy a stake in the business. This involved four steps.
The first was to expand UK retail estate from 25 stores to around 130 stores by opening 20 stores per year. Then, the plan was to expand overseas by choosing partners that demonstrated good retail experience, while also maintaining existing partnerships. We would grow the brand by evolving and expanding key clothing categories and launching into new categories such as luggage and sunglasses.
There would be a need to expand the proportion of internet sales from three per cent of group turnover to 20 per cent. In part this will be achieved by making the full range available online in the UK and by launching local language websites overseas, acting as an advanced party to developing land-based distribution. Brand awareness would improve and support partners.
What were the biggest challenges you faced?
There were many, but three stand out. Firstly, defining a role for finance in a business where credibility and impact were poor. It meant a total realignment to mirror the organisation’s structure and significantly enhancing capability.
Also, only I had Plc. experience at board level. The other four were focused on retail, brand, overseas expansion and corporate governance. I picked up all other functions. Being stretched across departments meant changing the way I managed the team. I would define their roles and let them get on with it until they were “in the deep end” – I would let them “sink but not drown.”
Supporting the CEO was another challenge. He had a particular management style and wasn’t interested in IT or corporate governance. He had what could be described as a “spider’s web” hierarchy. Employees needed his permission for everything. Consequently, much of my role was spent sweeping up after him as he drove the business forward.
What are you most proud of regarding your time with the business?
At 07:59 on 24 March 2010, I was sat in our broker’s office and saw the first trade of our newly listed share go through the London Stock Exchange. This moment represented the culmination of my finance career. At Superdry, I was lucky enough to take a company to market – I won’t get another chance (and certainly don’t want one).
Incidentally, that first trade went through at £4.99, a 1p discount to the listing price. From there the share price went north, trebling in 12 months and achieving FTSE 250 status together with IPO of the year.
What was your biggest mistake/ regret?
Not driving infrastructure development up the agenda. Towards the end of my career at Superdry we tried to implement a new warehouse system which had interfaces that failed between other systems. We missed Christmas that year which, for a retailer, where around 40 per cent of profits are generated in a six-week period, is a serious issue!
We focused too much on the external world (brand, consumers and stores) and didn’t pay enough attention to the internal world. If you imagine your business as a balloon, then it needs air pressure (infrastructure) to be increased as it grows. If it loses pressure it is likely to implode! That is broadly what happened.
What qualities are required in a good FD?
Finance and accounting expertise is a given. Then it is about who you are, your behaviour and how you lead a team. I believe a good FD needs to be able to do the following (in no particular order):
• Make decisions in ambiguous circumstances based on facts and intuition;
• Make up your mind quickly;
• Don’t interfere with others, trust them to do their job;
• Have respect for colleagues and be prepared to muck in;
• Provide air-cover for employees, giving time to all, no matter which department they work in;
• Recruit, reward and retain the best;
• Think clearly under pressure;
• Plan and anticipate for things to go wrong;
• Communicate clearly and succinctly to all levels;
• Demonstrate excellent interpersonal skills;
• Understand your role and how to sync with the CEO;
• Orchestrate a large team with multiple agendas; and/ or
• Clarify the strategic direction of the organisation.
How will technology impact the finance function?
There is a huge opportunity for greater analysis of data, more automation, electronic processing, etc. At the same time, businesses will be able to identify target markets at the level of an individual, and design bespoke, cost-effective communication using social media.
However, the biggest impact will be on the type of person required to work in finance and how they operate. In general, finance is exceptionally good at paying attention to detail, being numerate, analysing data to draw conclusions and reporting to the wider organisation. So, as the nature of work changes – less paper processing, for example – there will be a need to leverage these skills and recruit more analysts, strategists and those with overall business acumen.
Many other functions do not have these skills, so it is possible that those in finance will be the CEOs of the future.