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Shoefayre hoists For Sale sign as Co-op seeks footwear exit

Value footwear retailer Shoefayre is being touted around the market as its owner The Co-operative Group looks to dispose of its only interest in the fashion and footwear sector.

Industry sources say Shoefayre has been put up for sale halfway through a three-year recovery plan, although a price tag has not yet been discussed.

Shoefayre has 200 standalone stores and 50 Co-op concessions following a closure and relocation strategy implemented by previous managing director Lyle Findlay. He left in May to join TK Maxx as senior vice-president for UK retail.

The Co-operative Group is believed to be inviting banks and trade buyers to take a look at the company, with a view to offloading the business and thrashing out a price.

One footwear industry source said: "We have been offered it twice this year - once very recently. Co-op has not attached a price, but is looking for an exit."

The boss of one footwear business told Drapers he had run a ruler over the deal, but decided against a purchase. "I understand that Shoefayre's concessions within Co-op stores make money, because it pays such a small commission to Co-op for the space. Plus, all its stores are in secondary locations. The portfolio is so big that you'd have to trim it back and try to compete with rivals such as Shoe Zone."

The Co-operative Group turns over £7 billion a year, of which Shoefayre represents about 1%, posting sales of £61.7 million last year. The footwear chain recorded losses of £8m in 2005 and £6.3m in 2006, and its management have pledged to invest £10m in three years in a bid to turn the business around (Drapers, July 7).

A source close to the chain hinted that an MBO may be a possibility as the management, led by new managing director Simon Palmer, is committed to bringing the business back into the black within two years.

The Co-op did not deny the sale, but refused to comment further. A spokesman said: "The team at Shoefayre is working hard to improve business performance and their efforts are paying off."

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