Trading Update Hotter Shoes; Partnership with M&S

RNS Number : 9253B

Unbound Group PLC

17 February 2022

 

Unbound Group plc

Hotter Shoes Partnership with M&S

and

Trading Update for Hotter Shoes

17 February 2022

Unbound Group, which last month was admitted to trading on AIM, is pleased to provide a trading update for its subsidiary Hotter Shoes ("Hotter"), for the financial year ended 30 January 2022 (FY22). In addition, Hotter has agreed a partnership with Marks and Spencer ("M&S") to sell Hotter products on the "Brands at M&S" platform.  

Unbound Group is a new online multi-brand retail platform which is building on the strengths of, and customer loyalty to, Hotter, which has recently been successfully transformed under a new management team to become a digitally led retailer of comfort shoes with a growing (currently 4.6m) customer database. Unbound Group is developing its curated platform to offer a broader range of new and complementary own-brand and third-party services for its core target 55+ demographic. It is currently in discussion with a number of future partners with a target launch in summer 2022.

Hotter partnership with M&S

The development of Hotter's own digital partnership strategy continues to accelerate and, today, it announces that it has agreed a partnership with M&S to sell Hotter products on the "Brands at M&S" platform. This follows agreements with other retailers including John Lewis, Next and The Very Group to sell Hotter products online.

Hotter launches on M&S.com today, initially offering 32 products and increasing to 75 available directly via M&S.com. The specially curated Hotter range for M&S.com will be centred around comfort and active footwear and includes the comfort brand's prestigious Gore-Tex range. Both women's and men's footwear ranges will be available.

Hotter continues to focus on growing digital sales as part of its omni-channel offering.

Hotter Trading Update

Hotter's performance, following its transformation to become a digitally led business, continues to improve with Q4 delivering an increase in revenues of 10% compared to the same quarter in the prior year, achieving a gross margin above 61%, this being accomplished despite headwinds from COVID and supply chain challenges, though the latter improved and stabilised somewhat during the quarter.

Revenues for the year ended 30 January 2022 are significantly ahead of last year with an increase of 16% to approximately £51.9m (FY21: £44.5m), despite the significant challenges impacting the sector, particularly during the second half of the financial year. This performance reflects the strength of Hotter's products and multi-channel offering, with double digit percentage revenue growth being achieved in both the digital and traditional retail channels.

Hotter achieved significant increases in average selling prices in FY22 of over 16% compared to the prior year, and an improved gross margin to above 63%, an increase of over 9 percentage points from FY21 (where the average selling prices were impacted as a result of the pandemic). Hotter has seen a rapidly accelerating capture of email addresses, growing by over 35% in FY22, taking its emailable database to over one million (FY21: 767k).

On an IFRS basis, Hotter is expected to generate adjusted EBITDA of approximately £5.5m for FY22 (FY21 loss of £0.9m). Profit before tax and exceptional items for the year is anticipated to not be below £0.2m, an improvement of over £6m compared with the prior year (FY21 loss of £6.6m).

In addition, Hotter has significantly improved its net debt position, with banking net debt reducing by over £6m to £8.5m as at 30 January 2022 (FY21 £14.8m). The business successfully completed its refinancing in December 2021, with amortising debt facilities secured until December 2024.

The figures quoted above are subject to statutory audit. Adjusted profit figures exclude exceptional items primarily relating to IPO transaction costs.

Outlook

Looking ahead, management is confident in achieving the medium-term growth targets for both Hotter and Unbound as outlined on the Capital Markets Day in September 2021.

Specifically for Hotter, though supply chain disruption has been a challenge during H2 FY22, the UK manufacturing facility provided a level of resilience and availability improved during the final quarter of FY22. The spring summer 22 collection has been successfully launched in February 2022, with inventory on plan and at optimum levels. Management has fixed pricing agreements in place with a number of key suppliers and good flexibility within the remaining cost base to mitigate potential risks to consumer demand.

From an Unbound Group perspective, strong progress has been made in developing the new multi-brand ecommerce platform with a launch planned for this summer.

Ian Watson, Chief Executive Officer, commented:

"I am delighted that the progress we have made in resetting Hotter continues to be translated into improved financial performance and momentum. The partnership with M&S is further testimony to Hotter's attractiveness to other best in class retail platforms. The development of the Unbound Group platform is also gathering pace, we have strengthened the management team and we are currently engaged in positive discussions with a number of potential partners."

ENDS

ENQUIRIES

Unbound Group plc

Dan Lampard

020 3874 8300

Stifel Nicolaus Europe Limited (Nomad and corporate broker)

Ash Burman, Nick Adams, Stewart Wallace, Francis North

020 7710 7600

Vico Partners

Harry Constant  

020 3957 5045

NOTES TO EDITORS

Unbound Group plc

Unbound Group plc is the parent company for a group selling a range of brands focused on the 55+ demographic. Unbound Group will build on the solid foundation of Hotter Shoes, its current main business, to grow value through its curated, multi-brand retail platform supporting the active lifestyles of the 55+ demographic with a range of products and services. Unbound's expanded offering beyond footwear will feature a broad range of active lifestyle products and services, with third-party complementary brands featuring alongside new Unbound Group brands, as well as Hotter.

Hotter Shoes

Hotter Shoes, an Unbound Group plc company, is one of the UK's leading specialist footwear brands, selling over 1.4 million pairs of shoes per year. Hotter's footwear has an uncompromising focus on 'customised comfort' and perfect fit through the use of its differentiating technology, including its e-commerce platform, 3D foot scanner and augmented reality app which enables the consumer to try products virtually from home. Hotter has been transformed from a retail to a digitally led, omni-channel business over the past 3 years, selling its footwear to over 4 million customers via online, its direct mail order channel and its targeted 17 Technology Centres and 7 garden centre concessions in the UK. With its clearly defined, large and growing target demographic, Hotter now reaches 29% of the female population in the UK over the age of 55. Digital partnerships have recently been established with several online retailers including Next, John Lewis, The Very Group and M&S.

 

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