Kurt Geiger deal shows investors are head over heels with shoes
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Version 0 of 1. Shoppers are continuing to splash out on pricy footwear and it is not just consumers taking their credit cards out. A £245m sale yesterday of the retailer Kurt Geiger has cemented 2015 as a year where companies are investing heavily to stomp around the lucrative UK footwear sector. The private equity company Cinven, whose previous investments include Pizza Express, purchased London-founded Kurt Geiger from the New York investor Sycamore Partners. Its acquisition includes 80 stores and 240 concessions. Fans of the label, which made £260m of sales last year, include the model Gigi Hadid. Neil Clifford, the chief executive of Kurt Geiger, welcomed its new owner and said Cinven shares the footwear chain’s “long-term vision” for growth. The company joins a spate of recently acquired shoe brands whose new owners plan to invest in the businesses. Last week the Italian investor Investindustrial bought luxury label Sergio Rossi from Gucci’s parent Kering, and in November the South African retailer Truworths International agreed to pay £256m for the UK high street shoe chain Office. So why is the industry so attractive to private equity and what other companies are looking to expand in Britain? Data from the market researchers Mintel sheds some light on why the sector is so popular. Sales of shoes in the UK are expected to reach £10.3bn by the end of 2015, up 6.5 per cent from the previous year. Mintel also expects 30 per cent growth to reach £13.4bn between 2015 and 2020. Mintel’s senior fashion analyst Tamara Sender believes some brands have been leading the pack in contribution to UK wide sales. “Premium and high-end footwear retailers including Russell & Bromley, Dune Group and Kurt Geiger stand out as some of the winners in the footwear sector,” she says. “Strong growth from these players demonstrates that these brands are fighting off competition from multiple retailers by making their stores destinations for quality, trend-led shoes.” The industry is also maturing, she adds, pointing to new shoe types entering the luxury market, such as trainers. Brands such as Jimmy Choo may be known for skyscraper heels, but its trainers – such as the £450 “Bells” design – helped boost turnover in 2014. Chanel and Dior have also both designed luxury trainers. “Trainers have gone from being associated with youth culture and streetwear, to being more closely linked with high-end fashion” Ms Sender says. A wider range of products is likely to be well received by consumers whose pockets have been deepened by rock-bottom inflation and rising wages, Neil Saunders, an analyst at retail research agency Conlumino, says. It is not just footwear brands that have recently been sold that want to capitalise on stronger consumer confidence in the UK. Lucy Choi, the entrepreneurial niece of shoe tycoon Jimmy Choo opened her first standalone shop in London this summer, three years after launching the brand. The company wants to open five more UK stores by the end of 2016. In September the designer of the Sexy Thing shoe, Florence-based Aquazzura opened its first UK shop. Its founder Edgardo Osorio wants more concessions in a number of UK cities within the next five years. Property agents claim there are several more international shoe brands seeking space to expand in the UK, suggesting both investors and designers think the shoe currently fits to make serious money. |