Cinven, a large U.K.-based private equity company, has agreed to acquire Kurt Geiger, the leading British vendor, distributor and retailer of luxury and medium-priced women's shoes and accessories, which has recently diversified with a men's line and children's shoes. Cinven said it was making the investment with a view to further expansion through “in-market consolidation,” a “digitalization strategy” and international growth, including a further roll-out of the Kurt Geiger brand in Asia and Australia.
The statement seems to indicate that Cinven would consider further acquisitions in the British shoe retailing space, where other big chains such as Brantano, Jones Bootmaker and Office have changed hands recently. It also indicates that Kurt Geiger's internationalization process will continue to focus for the moment on China and other parts of Asia, where it has set up about 15 stores since it entered the market two years ago.
Kurt Geiger sells its products in 80 countries under various brands related to its trade name, plus Carvela, and it has distribution agreements in the U.K. for others. It has more than 70 corporate and franchised stores in the U.K. and elsewhere, in addition to more than 170 shoe retail concessions at leading department stores such as Harrods, Selfridges and House of Fraser.
Founded in 1963 by the eponymous Austrian entrepreneur with two stores on Sloane Street and Bond Street in London, Kurt Geiger has gone through several changes of ownership. It was first bought by House of Fraser in 1995. It was acquired ten years later by Barclays Private Equity, which supported a management buyout led by its chief executive, Neil Clifford. The company continued to develop in the U.K. and Ireland. It launched its first online store in 2006 and began to expand into Europe and the Middle East in 2007, notably by signing up concessions with the Printemps and Rinascente department stores in France and Italy.
In 2008, Clifford led a second management buyout of the company with the support of Graphite Capital, which gave Kurt Geiger a valuation of £95 million (€128.8m-$141.4m). Kurt Geiger then began to tackle the North American market in 2012, the year after it was acquired by the former Jones Group, owner of Nine West and other brands and banners, for £215 million (€291.6m-$320.0m) including debt. However, Kurt Geiger hasn't managed to get a stronghold there with its own stores. It was planning to open between ten and 15 stores in the U.S., but it didn't happen.
As previously reported, at the beginning of 2014, after its $2.2 billion acquisition of Jones, Sycamore Partners spun off Kurt Geiger, Brian Atwood and Stuart Weitzman. It backed a new management buyout of Kurt Geiger by Clifford. Earlier this year, Sycamore and Clifford were said to be looking for a new investor for a price of around £300 million (€406.8m-$446.5m). Three candidates reportedly emerged: Lion Capital, the former controlling shareholder of Jimmy Choo, L Capital, the investment fund controlled by LVMH; and Advent Capital.
In the end, Cinven is said to have agreed to pay £245 million (€332.3m-$364.6m) for Kurt Geiger, which reported big increases in operating earnings before amortization (Ebitda) to £21.3 million (€28.9m-$31.7m) and after amortization (Ebit) to £11.2 million (€15.2m-$16.7m) for 2014 on sales of £251 million (€340.5m-$373.6m). It is the first major acquisition made by Cinven in the sector, and the investment company is justifying it also with the fact that the £8 billion (€10.9bn-$11.9bn) British footwear market is forecast to grow at an annual rate of 3 percent.
Clifford and his management team are expected to continue to run Kurt Geiger. The team includes two other long-standing executives of the company: Rebecca Farrar-Hockley, who has been its head buyer and creative director, and Dale Christilaw, chief financial officer. Advisers on the transaction included Nomura International, Bain, PwC, Freshfields Bruckhaus Deringer and Marsh.