Three top executives at Stead & Simpson have taken part in the management buy-out of the British shoe retailer, supported by the Bank of Scotland through an integrated finance package of £51.4 million (€74.9m-$90.4m). The majority of the company’s shares are now owned jointly by David Lockyer, chief executive, Peter Foot, finance director, and Roger Parr, buying director. They will hold a minority stake.

The shares were acquired from John Shannon, current chairman, and from Development Securities. Shannon is leaving the company to be replaced with Barry Stevenson, a retail consultant who previously worked as a director for Marks & Spencer and as chief executive at B&Q, a leading British do-it-yourself home improvement chain. Development Securities is a property firm that had been looking for an exit with a capital gain, as Stead & Simpson’s financial results have been improving steadily over the last years. The retail group’s former majority shareholder, Apax Partners, had already sold out its 67 percent stake in 2004.

Lockyer and Foot will pump a large part of the gains made on the buy-out back into the company. They will continue to refurbish the entire Stead & Simpson chain, which comprises five banners: Stead & Simpson, Shoe Express, Lilley & Skinner, Famous Footwear and Peter Briggs. The company has already given a lift to about 60 percent of its 400-odd stores, and some 120 others are in line for improvement. About 40 shops should be closed over the next three years.

The Stead & Simpson network has been consistently upgraded over the last years, adding more upmarket brands. Some of the Stead & Simpson stores were converted into Peter Briggs units selling branded footwear. The management’s second large-scale project is to expand its chain of 32 factory outlets operating under the Famous Footwear banner. Two openings are already scheduled for this year, and the door count should grow to at least 40 factory outlets in three years’ time.

Assuming that the published cost of the transaction of £51.4 million covers close to 100 percent of the equity, the new shareholders are paying a fair price for the company, which generated an operating profit of about £9 million (€13.1m-$15.8m) after amortization in 2004. Overall, the company had sales of over £140 million (€204.1m-$246.3m)last year, up slightly from the previous year but much better than the market, which had little or no growth in the specialty shoe channel. Company managers believe that the British retail environment will continue to be tough this year, due to abrupt price increases for almost anything from energy to transport.