The kids are all right: Schuh staff share £37m
Friday 24 June 2011
The footwear chain Schuh is to share nearly £40m among almost 3,000 of its youthful staff after it was acquired by Genesco, the US retail group, in a deal worth £125m.
Colin Temple, the managing director of Schuh, and Mark Crutchley, its finance director, will net a whopping £25m each, but the earn-out depends on them remaining at the company. The two directors own 75 per cent of the retailer.
Genesco said that Schuh – which is based in Livingston, Scotland, and has 59 stores and 16 concessions – has "attractive store economics and solid growth prospects".
Schuh's 2,827 staff, who have an average age of 21, will share a payout of £37.3m, based on their salary and length of service at the retailer.
For instance, an employee of Schuh for four years would receive a bonus equal to 110 per cent of their salary, while someone with 10 years' service will bag a multiple of 250 per cent.
The branded-footwear chain is also donating up to £7m from the transaction towards a newly established charitable foundation, the Schuh Trust.
In addition, the deal provides for an earnings-related bonus of up to £25m payable if Schuh hits targets for underlying earnings.
Mr Temple – who joined Schuh 26 years ago as a merchandiser of men's footwear – said it had been approached by Genesco about the acquisition, rather than soliciting a sale.
Schuh delivered net sales of about £164m in the year to 27 March 2011, boasting an operating margin of more than 9 per cent.
He said: "It secures growth for us under a parent, such as Genesco. The cost of borrowing is cheaper for us and they understand the pain we sometimes feel because they are in the same marketplace."
The purchase price paid by Genesco was £100m before adjustments for debt and working capital.
Genesco sells footwear, headwear sports apparel and accessories in more than 2,285 retail stores in the US and Canada, primarily under the names Journeys, Lids and Johnston & Murphy.
Schuh is the latest UK retailer to be acquired by a bigger US group. Jones Group bought Kurt Geiger, the premium shoe retailer, from Graphite Capital, in a deal worth £215m this month.
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