Jimmy Choo announces London IPO. Do shoes make good stocks?
Jimmy Choo has announced its intention to float its shares in London next month as part of an expansion drive, particularly in China. Jimmy Choo said Tuesday it plans to list at least a quarter of its shares on the London Stock Exchange in October.
Luxury shoemaker Jimmy Choo has announced its intention to float its shares in London next month as part of an expansion drive, particularly in China.
The designer label said Tuesday it plans to list at least a quarter of its shares on the London Stock Exchange in October.
The brand, which recorded sales of 282 million pounds ($462 million) in 2013, said it is looking to grow in Asia and other new markets, and plans to open 10 to 15 stores per year.
Malaysian-born designer Jimmy Choo and the brand's co-founder Tamara Mellon opened their first store in London in 1996. It is now owned by private investment firm JAB Luxury, which acquired it in 2011.
The label has 120 stores worldwide selling designer shoes and handbags, and is led by creative director Sandra Choi, who is Choo's niece .Choo departed the company in 2001 and Mellon left in 2011.
JAB will sell part of their existing shares in Jimmy Choo in next month's initial public offering. The shoemaker said it will not be issuing any new shares to investors.
The IPO is expected to be profitable for the company, but Business Insider warns that Jimmy Choo's sales growth has lagged in recent years, and the company's cash situation is worrying:
[Jimmy Choo's] revenue growth is in decline — to just 2.2% in like-for-like sales last year — although it is profitable.
The company did not reveal a standard net income number. Instead it revealed "adjusted consolidated net income" of £10.8 million on revenues of £120 million for the first half of 2014. The company had profits of £21 million on full-year revenue of £281.5 million in 2013.
The company said its sales growth would have been stronger if not for a store renovation program which reduced like-for-like sales by 1.6%. However, even if that is added back, it's still less than last year's 7.1% sales growth.
Perhaps most worrying, the company's cash flow is in a three-year decline
Peter Harf, non-executive chairman of Jimmy Choo, said in a statement the company is "confident that shareholders can expect strong growth and cash flow in the years to come."
Much of the focus of the expansion will be on China, where the brand wants to grow the number of stores from 10 to at least 30 "in the medium term." It is also looking at other emerging markets including the Middle East, South Korea, Singapore and Malaysia.
Going public is a new step for Jimmy Choo, which has "passed through thr hands of several private equity owners over the years," according to the New York Times:
The company was first acquired by Phoenix Equity Partners, which later invested in the shoe brand L.K. Bennett, in 2001 and then was passed on to Lion Capital in 2004. Ms. Mellon and TowerBrook Capital Partners took control in 2007.
The company was sold in 2011 to Labelux, a luxury goods company founded by the Reimann family, which owns Joh. A. Benckiser. Earlier this year, Joh. A. Benckiser restructured its luxury arm, putting the Jimmy Choo and Belstaff brands under its direct control.
The company said it saw revenues of 150 million pounds in the first half of this year, up 9.4 percent compared to the same period last year.