West Coast Capital boss to cash in after footwear chain’s strong performance
Retail entrepreneur Sir Tom Hunter has hoisted a For Sale sign over Office, setting a price tag of up to £200m for the footwear chain.
Hunter, who owns Office via his West Coast Capital private equity business, has appointed UK corporate advisory firm Hawkpoint and US investment specialist Financo to explore options for Office including a sale.
The decision follows a number of unsolicited approaches for Office after its strong performance in the year to January 31, when EBITDA rose to £18.5m, up from £10.5m the year before.
Office has benefited from consolidation in the footwear market during the downturn after the collapse of specialist footwear players such as Faith, Shoe Studio Group and Stylo, and from strong demand for brands including Ugg Australia, which it sells alongside Vans, Adidas, Fred Perry and its own label.
Since West Coast Capital acquired Office in 2003, the business, led by chief executive Brian McCluskey, tripled its store numbers to 124 including concessions in Topshop, House of Fraser, Harvey Nichols and Selfridges, and has laid out plans to expand in the UK and overseas as well as online.
McCluskey said: “West Coast Capital has held the business for seven years so this is timely in the lifecycle of private equity, particularly given we have received several unsolicited approaches for the business.”
A spokesman for Office added: “Growth plans will continue unabated. There are clear opportunities to license the business worldwide or open concessions in major retailers or establish more of our own stores. We also have a strong European strategy for our website.”
Office, which plans to put out an information memorandum at the end of August, said the company continued to increase its profits and was trading well but would not disclose current trading figures.
West Coast Capital wants offers of between £150m and £200m for Office. Earlier this year the chain turned down unsolicited offers of between £110m and £120m froma private equity firm and a trade buyer.
The decision to test the market for valuations was also spurred by the successful sale of young fashion chain Republic last month, said the spokesman. Young fashion business SuperGroup also floated on the stock exchange in March.
West Coast Capital, which owns more than 90% of Office, said the management team, headed up by McCluskey - who owns the remaining shares in the business - would continue to run the company following any sale.
One industry observer said that while an international push by Office was an obvious route to growth for investors, it also brought challenges for a business that is yet to be fully tested overseas, including brand distribution issues.
He said: “On branded product, margins get a lot more difficult because of costs and currency issues. Office remains heavily branded but it may need more own label to make the numbers stack up overseas.”
Another senior retail boss said: “Office is a very good, highly profitable business and the management team has done a great job. I hope it can achieve the sale and I expect private equity firms to be interested.”
Separately, footwear chain Schuh notched up record results in the year to March 28. EBITDA rose 21% to £17.3m and sales grew £12m to £146m.