High street shoe chain Faith pins its hopes on management buyout
Accountants appointed to handle sale of retailer's 78 stores and 120 concessions
Friday 26 March 2010
The women's footwear retailer Faith has appointed advisers to run a sale that is likely to lead to a management buyout backed by private equity.
Following a number of unsolicited approaches, the accountant Grant Thornton has been hired to handle the sale of the high street chain, which has 78 shops. Clearwater Corporate Finance is believed to be advising Faith's management team, led by the Scottish entrepreneur John Kinnaird, on the right private equity house to choose.
A deadline for the first round of bids is likely to be next month. A price tag for Faith is unclear but it is likely to be less than the £64m Bridgepoint paid for the company in 2004. Faith is the latest in a series of high street retailers to be put up for sale.
This year, the arts and crafts outlet Hobbycraft, floral clothing specialist Cath Kidston, card chain Card Factory and DFS furniture stores have all been put on the market.
It is thought that Faith, which also has more than 120 concessions in stores such as Debenhams and Topshop, wants fresh funds to take the business forward and to help Mr Kinnaird deliver his turnaround strategy. Management own more than 60 per cent of the firm.
Mr Kinnaird yesterday confirmed the appointment of Grant Thornton and Clearwater, telling The Independent that Faith had returned to profit, with earnings before interest, tax, depreciation and amortisation totalling £1.5m in the year to January. This followed a loss of £5.5m the previous year which included eight months under the former owner. Clearwater and Grant Thornton declined to comment.
Mr Kinnaird, former chief executive of the defunct shoe shop chain Dolcis, and the investment fund Agilo bought Faith out of administration for an undisclosed sum in September 2008.
Since buying Faith, Mr Kinnaird has initiated a raft of changes as its chief executive. He has trimmed costs by reshaping its portfolio of shops, relocating its head office to a business park in West London and moving its warehouse operation from the South-east to Northampton. He has also set up a new website and plans to introduce a small range of men's footwear. A source said: "The management team has done a lot in a short space of time. Kinnaird is keen to develop the business."
The Scottish entrepreneur believes there is an opportunity for Faith to prosper in the middle market and it recently refurbished its flagship branch in London's Oxford Street.
Debenhams is also thought to be keen to take a further 20 Faith concessions later this year. Towards the end of Bridgepoint's ownership of Faith, the chain had lost its way and eventually buckled under the weight of its debts.
For the past few months, Mr Kinnaird has been trying to restructure his group of retail companies under the umbrella of FEC Holdings. This month, the group sold its young fashion chain Envy Retail to a consortium of private investors, including Chris Althorp-Gormlay, who runs SKG Capital. At the time, Mr Kinnaird said it would allow him to focus on his core businesses of Faith Shoes and Chilli Pepper, its fashion wholesale unit.
Over the past three years, a number of shoe shop chains have hit the buffers. Dolcis has disappeared and, following the collapse of their parent company, Barratts and Priceless Shoes emerged from administration last year but with fewer stores.
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