Electra hires Stifel for Hotter Shoes sale

The timing of the launch of any sales process will be determined over the coming months as trading patterns normalise in Hotter's new business model focused on direct-to-consumer channels predominantly in the UK and US, according to a statement from listed private equity firm Electra, though press reports have suggested the auction is expected to take place next year.

In June 2020, the company, which trades online and in stores, launched a company voluntary arrangement (CVA) and announced plans to close more than 45 stores, leaving it with 15 sites. As part of the CVA, Electra injected £2m in fresh capital.

More than 70% of profits come from direct channels in the UK and the US, but Hotter is now focused on its digitalisation strategy.

The resumption from Covid-19 disruption presents Hotter with many challenges including the availability of raw materials, primarily from India, for autumn and winter production, Electra stated on its website. It also noted that the biggest continuing threats are the cost and working capital requirements of operating the retail estate with uncertain returns, following the erosion of cash reserves during lockdown. Hotter is engaged with its retail employees and landlords to allow a smaller but more resilient business to emerge, Electra said.

Electra acquired the company in 2014 for approximately £200m.

Skelmersdale-based Hotter had revenues of £89.3m in the year ending on 31 January 2020, but was forecast to make £47m in sales this year and report a £9m loss, according to a Sunday Telegraph report on 21 June. For the year ending on 31 January 2020, it generated EBITDA of £4.3m.

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• Topics
• Exits
• UK / Ireland
• Consumer
• Electra Private Equity
• United Kingdom