Hotter Shoes' private equity owner planning sale

Electra Private Equity, the owner of Britain’s biggest shoemaker Hotter Shoes, is planning to launch an auction for the business next year. It has been reported that the sales process, which is being handled by investment bank Stifel, will not proceed until the business returns to more normal trading conditions.

The news comes just months after Electra launched a company voluntary arrangement (CVA) in order to reduce its rent bills and announced plans to close over 45 stores, leaving 15 standalone sites and concessions in operation.

The CVA was approved in July and the period in which creditors could challenge this expired in August. After which Electra injected £2 million of new funding into Hotter Shoes, to be spent on strategic initiatives, such as improving the company’s product development capabilities.

Founded in Lancashire in 1959, Hotter Shoes continues to manufacture its shoes in the UK. However, its outlets in England are currently shuttered under COVID-19 lockdown restrictions, while some Wales and Scotland stores remain open.

Prior to the pandemic, Hotter Shoes had been improving its performance following a difficult 2018, with Electra having put in place a new management team headed by Ian Watson, formerly an executive at Start-rite, during 2019.

In the year to January 28 2018, Electra reported that Hotter generated sales of £100.8 million, which fell to £93 million in the year to January 2019. In the year ending January 2018, Hotter’s EBITDA was £9.5 million, falling to £3.5 million in January 2019, before recovering slightly to £6.2 million by the end of 2019.

In the same period, the company’s return on capital fell from 5.9 per cent to 3.4 per cent, before recovering to 5.9 per cent during 2019. The recovery was led by an increased focus on digital, with online sales nearing a third of total turnover.

In 2019, Electra emphasised its ongoing commitment to Hotter Shoes, saying it had invested £7.5 million in the brand in early 2019 and forecasting that the benefit of its “structural and transformational” changes should be “increasingly apparent from the third quarter of 2020”.


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