Virgin takes on Boots

Victory Corporation, a joint venture between Virgin and entrepreneurs Rory and Tim McCarthy, plans to shake up high-street cosmetics retailing with a 100-strong chain to challenge Boots, Body Shop and upmarket department stores.

The news comes as Victory last week completed a pounds 45m placing to fund its new Virgin cosmetics concept and a new brand of Virgin jeans and casualwear.

Victory's shares start trading on the Alternative Investment Market on Thursday in a pounds 110m flotation at the 58p placing price. "This is an opportunity for the public to invest again in the success of the Virgin brand," said Rory McCarthy, Victory's chairman.

The flotation leaves over half the shares with institutions and small shareholders, with the McCarthys holding a third directly and via their Alberta-quoted McCarthy Corporation.

Virgin, which has licensed its name for the ventures, has a 10 per cent stake in Victory itself, as well as half the cosmetics subsidiary and 30 per cent of the clothing operation.

Whereas Virgin jeans will be a branded product, sold through 400 stores owned by others, it is the cosmetics venture that has set the retail sector buzzing.

From a launch in time for Christmas 1997, Victory hopes to fill a price and product niche between the up-market brands and the likes of Boots and Body Shop in an industry that is worth pounds 4.1bn each year.

A 700-strong range, from eye shadows to aftershave, will be sold under the Virgin name from its own outlets, which will be staffed by qualified beauty therapists. "It will be entirely the Virgin ethos: first-class service at business-class prices," Mr McCarthy said. Victory also has plans for franchises overseas.

The range has been designed by Liz and Mark Warom, who were responsible for the Body Shop's colour cosmetics range. Mr McCarthy stresses, however, that Victory does not aim to mimic Body Shop's environmental marketing stance.

Victory will launch Virgin jeans soon afterwards and aims to turn initial losses into a pounds 2.4m profit in 2000, rising to pounds 34.8m on sales of pounds 207m by 2007.

The placing attracted around 50 City institutions. They include Clerical Medical, Guardian and Morgan Grenfell, which have taken the largest stakes.