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Mosaic puts Shoe Studio on market

Mosaic Fashions has hoisted the For Sale sign over its Shoe Studio Group business, in an effort to exit the increasingly competitive footwear sector and refocus on its womenswear brands.

After months of speculation about the future of the footwear concession group, Mosaic Fashions this week confirmed it had hired corporate advisory firm Hawkpoint to lead a sale of the business. Drapers first speculated that Mosaic was considering offloading the poorly performing footwear division back in August 2008, and rumours of a sale have persisted ever since.

Trading at Shoe Studio Group is believed to have been poor for at least 18 months and it is understood to have racked up losses in the high single digits for the current financial year, which ends on January 31.

These losses are understood to have prompted Mosaic, which is facing other more pressing problems linked to its Icelandic banks and shareholders, to push the button on an exit to focus on a refinancing for its womenswear operation. It also owns the Oasis, Karen Millen, Warehouse, Principles and Coast chains.

Shoe Studio Group managing director Gordon Baird, who joined the firm last June, said: “Having completed a detailed review of the business and the opportunities in the footwear market, we believe this is the right time to move to build on the company’s historic strength and maximise its future potential as a focused footwear specialist operation.”

Mosaic Fashions acquired Shoe Studio as part of its merger with Rubicon Retail in June 2006. At that time, Shoe Studio was thought to be making EBITDA of more than £12 million on sales of £125m. The integration of the footwear business into the larger group was complex and that is thought to have impacted on sales and profitability.

The industry also widely believes the business has fallen significantly behind rivals on product, sourcing and pricing, adding to its woes.

However, Shoe Studio retains a strong portfolio of brands which include Pied à Terre, Bertie and Roberto Vianni, and these could have significant potential. It also has the licence for US brand Nine West, which is expected to support a sale to a trade player.

Possible buyers for the group include its main competitor Kurt Geiger and footwear veteran David Spitz, who worked with Shoe Studio’s former owner Don McCarthy at the footwear group throughout the 1990s. Spitz is a non-executive director at footwear firm Stylo and has links with various overseas suppliers and retailers.

Office, which is owned by entrepreneur Sir Tom Hunter’s West Coast Capital fund, could also look at the business, although it is unclear whether it would be able to finance such a deal in the current climate.

Another possible buyer could be Dune, where John Egan is chief executive. Egan was previously managing director of Shoe Studio, but left the business early last year.

Shoe Studio Group’s department store partners, which include House of Fraser, Debenhams, John Lewis and Fenwick, will watch the sale process with interest. Several have already been scaling back Shoe Studio’s presence within their stores.

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