Electra demerger plan progressing – Electra Private Equity says that its board is confident that the value creation opportunity arising from both the demerger of Electra’s hospitality brands (mainly TGI Fridays) by spinning them off into a new company Hostmore, and the subsequent transition of Electra to AIM as the parent company of Hotter Shoes is the most attractive route to create both short and longer term shareholder value.
Preparations for the demerger of Hostmore are proceeding well and further announcements will follow shortly. Electra will then change its name to Unbound Group.
Electra says that, with a strong and growing digital focus, Hotter is now a fast growing, profitable and cash generative e-commerce focused footwear brand. Hotter’s direct to consumer channels now reach 29% of the female population in the UK over the age of 55. There are plans to expand the offering beyond footwear. The board feels that the over 55 demographic is a materially underserved online audience. This despite:
- Rapidly increasing digital literacy – now generating over 30% of overall internet participation
- Long term structural growth, significantly in excess of growth in younger demographics
- Focus on health, wellbeing, leisure and recreation with a more acute need for comfort over performance
- A high concentration of UK wealth , which they believe means that these consumers are more focused on value rather than price
Unbound will provide a marketplace delivering a range of products and services that support the wellbeing and active lifestyles of its chosen customer community. The expanded offering will feature apparel and wellness brands alongside third party complementary brands. Unbound hopes to offer its first products beyond footwear from H1 2022.
As part of the transition to Unbound, Hotter has appointed Dan Lampard as the new chief financial officer, effective from 30th August 2021. Dan has performed a number of different financial and commercial roles, most recently as CFO Glanbia Performance Nutritions.
Hotter Shoes trading update
In the first 6 months of its financial year (which runs to the end of January 2022) Hotter’s UK direct to consumer sales have grown 39% on the comparable period in 2020. In the same period overall sales growth has been 25%. Overall gross margin over the 6 month period was 63%, up from 53% in the same period in 2020 and over the same period fixed costs have reduced by 34% year-on-year.
ELTA : Electra demerger plan progressing