Kurt Geiger to march into US after £215m deal
Friday 03 June 2011
The upmarket shoe retailer Kurt Geiger is to embark on an opening offensive in the US over the next 18 months after it was acquired by the retail giant Jones Group from Graphite Capital, in a deal worth £215m.
Kurt Geiger, which sells more than 100 brands from Gucci to Ugg, as well as its own-brand shoes, also intends to use the retail network of its new owner to launch in Asia.
Neil Clifford, the chief executive of Kurt Geiger, said: "America, in particular, is something we are very excited about in terms of opening stores in the major cities of the US in the next 12 to 18 months. I would be disappointed if it was not next year."
He said: "The American market is a tough market to crack if you do it on your own. So to have a bit of a grown-up uncle to do that is a good thing."
UK retailers from Marks & Spencer to Sainsbury's have failed in the US, while Tesco's Fresh & Easy chain suffered losses of £186m there last year.
Mr Clifford declined to name the Asian cities it would target, but Kurt Geiger said Asian shoppers in its London outlets had helped reduce the average size of the women's shoes it sells to 5 from 6.5 18 months ago.
Mr Clifford said the retailer had been working on the deal with Jones for almost two years, since it became the UK distribution partner for the US group's Nine West shoe brand.
Kurt Geiger – which has 49 company-owned shops and 156 concessions, in stores such as Harrods and Selfridges – grew sales by 22 per cent to £205m for the year to 30 April. It was boosted by "double-digit" like-for-like sales growth. Kurt Geiger launched overseas in 2005 with a concession in Printemps in Paris, and now sells through franchise partners in the Gulf, Russia and Turkey.
The transaction is a major coup for Graphite Capital, which backed a £95m management buyout of Kurt Geiger in February 2008. This came after Barclays Private Equity had funded an MBO for £46m in 2005.
Mr Clifford said that although it had had an "incredible journey with private equity", it had wanted to "park the company" with a more long-term partner. "You are looking over your shoulder every three years. There comes a point when you don't want to put the company at further risk with debt and levels of investment."
Jones Group is a retailer, designer and wholesaler of more than 35 brands, including Nine West, Jones New York, Easy Spirit and Gloria Vanderbilt. The group, which has five divisions – apparel, footwear, jeanswear, jewellery and handbags – increased revenues by 8 per cent to $961m (£588m) for the quarter to 2 April.
It will retain Kurt Geiger's team, including Mr Clifford, Rebecca Farrar Hockley, its buying and creative director, and Dale Christilaw, the finance director. After Graphite sold its 72 per cent stake in the business, Mr Clifford said: "They [Graphite] have taken their money and run but we have invested significantly."
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