Key Investments

This page shows Electra's current significant Buyouts and Co-investments (valuation as of 31 March 2018).

Hotter Shoes
Shoes designer, manufacturer and retailer

Hotter Shoes

Year ended 31 January    
  2016 2017
  £m £m
Sales 101.3 98.0
Operating Profit 3.4 4.3
EBITDA 8.3 9.0

In January 2014, Electra invested £84 million in the management buyout of Hotter Shoes from the company’s founder and Gresham LLP. In July 2017, as part of a wider transaction, £1 million was paid to Epiris for their 1% interest in the company. In October 2017, £4 million was invested into the business and, in April 2018, Electra bought out the founder’s interest for £19 million.

Established in 1959, Hotter is Britain’s largest shoe manufacturer and sells over two million pairs of shoes each year in the UK and internationally: in stores, in catalogues and online. The company, with a strong focus on comfort and service, targets customers whose age, health or lifestyle are such that they require more cushioned and supportive footwear. Sales had more than doubled in the four years prior to the buyout, driven by demographic change (in particular population ageing), international growth and the rapid roll-out of a retail store estate in the UK.

Since her appointment in 2016, after a difficult trading period for the company, the new Chief Executive strengthened the leadership team and commenced implementation of a turnaround plan focused on cash, inventory and cost management as well as retail performance improvement. A large investment is underway to improve IT systems across the business which will help to support future growth. Hotter Shoes is focusing investment into international growth opportunities and online sales. It is supporting this change by enhancing the product range and branding to attract a broader range of customers; in particular, a younger demographic that values comfort as well as style. The recent acquisition of the founder’s interest in the business will enable implementation of this strategy.

The year to January 2018 showed growth in sales and EBITDA, particularly in the international and wholesale channels; but offset by difficult trading in the UK market. Performance in the first two months of this year suffered significantly due to severe weather in the UK which resulted in substantially lower footfall in stores across the country for a number of days in common with the UK retail sector. The impact of this is considered to be a one-off that does not reflect the true underlying performance of the business.

Activity:

Shoes designer, manufacturer and retailer

Date of initial investment:

January 2014

Type of deal:

Buyout

Equity Ownership:

66%

Cost:

£89m

Valuation:

£30m

Multiple of cost:

0.3x

Location:

International

Website:

www.hotter.com

Management:

Sara Prowse, CEO; Alan White, Chairman

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