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Office float could spur international expansion

International expansion is likely to be top of the agenda for footwear retailer Office if it floats on the London Stock Exchange next year.

However, retailers and analysts urged caution after a number of proposed retail IPOs ran into turbulence earlier this year, adding that a sale could be on the cards instead.

Office is understood to be considering a float in 2015 that would value the company at £300m. The retailer’s private equity owner, Silverfleet Capital, is reportedly close to appointing bankers at JP Morgan to look at options that could also include a sale of the business. It is not known whether a sale would be for the whole, or part of, the business.

Industry insiders told Drapers Office was likely to be mulling a float to fund a boost to its international footprint.

Office has three stores in Oberhausen, Dusseldorf and Bonn in Germany, as well as concessions in Topshop stores in Las Vegas, New York and Chicago.

Verdict Retail analyst Honor Westnedge said: “By floating the business, Office would be able to expand its brand presence outside the UK, where it now has a good coverage and a 4.4% share of the footwear market.

“The UK is a competitive market and opportunities for growth will slow unless it extends its product proposition, so international expansion should be its next step.”

The chief executive of one major UK footwear chain agreed. “When a private equity firm buys a business in the UK it needs to grow it and I don’t see how Office can get much bigger unless it expands into the EU.”

However, he also voiced his concern over the IPO plans given how many high-profile flotations have fallen through in the past six months. “The timing is surprising. I think they are putting out feelers and sending a signal to the trade that they are up for sale,” he said.

Another footwear veteran suggested a sale of all or part of the business might be more likely than a float: “I do wonder whether this is just recent history repeating itself. Remember what happened with M and M Direct’s, Blue Inc’s and HoF’s IPOs; they all resulted in takeovers or new private investment.”

In June, Blue Inc and M and M Direct announced they had opted for private sales despite preparing to list on the market. Fat Face also abandoned an IPO in May.

Retail analyst Nick Bubb said it could be a good move given the success of the Shoe Zone IPO in May. But he added: “The trade vibes are that the business has gone off the boil a bit recently. If Silverfleet thinks the business can stand on its own two feet next year, it will need a credible growth story for investors.”

When contacted by Drapers, Office chief executive Brian McCluskey said the company “does not comment on speculation in the press”.

In July, Sports Direct indicated it had been seeking to acquire Office, with chief executive David Forsey claiming Adidas had blocked the proposed takeover with its “anti-competitive” behaviour.

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