Shellys shoe chain sold for just £1.5m

Shellys Shoes, the shoe retailer and designer whose creations have been worn by stars such as Robbie Williams, Kylie Minogue and Geri Halliwell, has been sold for a knock-down price of £1.5m.

The loss-making group, which has 11 stores and a highly regarded design business, has been acquired by Stylo, a company not normally associated with catwalk fashion. It has 370 high street stores under the Barratts and Priceless names as well as 300 concessions in branches of Dorothy Perkins.

Shellys was founded in the 1940s and has been at the vanguard of footwear fashion ever since. It claims to have been the first to introduce crepe soles in the 1950s, winklepickers in the 1960s, Doctor Martens and platform soles in the 1970s and Chelsea boots in the 1980s.

The Sugarbabes, Misteeq and Kelly Osbourne are some of the celebrities and rock stars who have recently rediscovered the brand's appeal. Shellys' "baggy boot" and "rainbow court" have helped the group re-establish its position in affordable shoes in the last few years.

Michael Ziff, Stylo's chairman, said the deal would enable his stores to get cutting- edge fashion shoes into its high street stores more quickly. "Shellys is a brand leader in the fashion arena," he said. "We have been looking for some time to set up our own design centre but these guys are already there. We can be earlier into fashion than we previously have been."

Mr Ziff said other attractions included Shellys portfolio of stores, which include five in London such as its flagship store on Oxford Circus and a long-standing site in Covent Garden. There will also be some cost-savings in back-office areas, Mr Ziff said.

Shellys was founded in 1940 by the Robbins family which still controls it. But last year it recorded a loss of £2.4m on sales of £21.5m. Stylo said this was partly due to a decision to cut stock of top brands such as Doctor Martens and Kickers in favour of its own designs. Sales fell as a result. It is thought the group's overheads were also too high for the size of the business.

Shelly Robbins, Shellys' managing director will stay on as a consultant. "I look forward to working with Stylo to build on the undoubted strength of the Shellys brand and complement the existing chains managed by Stylo," he said.

Stylo is paying £750,000 in cash with the remainder due in cash in a year's time. It will continue to run Shellys as a separate business and hopes to grow its overseas wholesale business.

Stylo made profits of £1.9m on sales of £197m in the year to February 2002. Its results for the current year are due in the next few weeks. The shares closed unchanged at 32.5p.