Despite difficult retail conditions, branded footwear and clothing retailer Footasylum is testing appetite for an AIM float, with debut dealings slated for next month.
Steered by the founders of growth stock star turn JD Sports Fashion (JD.), the lifestyle fashion retailer’s IPO will reportedly value the business at around £150m and help it capitalise on the booming ‘athleisure’ trend.
As today’s Intention To Float document explains, Footastylum sells ‘on-trend’ branded footwear and apparel to fashion conscious younger customers in the 16-to-24 year-old demographic.
These include well-known third party brands such as Adidas, Puma, Nike, Converse, Calvin Klein and The North Face.
Footasylum plans to build global recognition for its stable of own brands, designed in-house and turned around quickly to capitalise on market trends.
These span Kings Will Dream, sold under a wholesale distribution contract with ASOS (ASC:AIM) globally, as well as Glorious Gangsta, Condemned Nation and Alessandro Zavetti.
MANAGEMENT NOUS
The business was established in 2005 by David Makin, one of the two co-founders of JD Sports in the early 1980s. Makin was later joined by the other co-founder, John Wardle, in 2008.
Wardle, executive chairman, is the former chairman of Manchester City Football Club. He’ll retire from the role next summer, when Barry Bown, who served as CEO of JD Sports between 2000 and 2014, will take over as executive chairman.
Clare Nesbitt, another with strong retail sector credentials who succeeded Wardle as CEO in 2015, comments: ‘We are thrilled to be announcing our intention to list on AIM. This is a logical next step in Footasylum’s upward trajectory as we seek to build on our exciting product-led, multi-channel expansion strategy. We pride ourselves on being a dynamic, adaptive and fast-moving business with a strong competitive position, a great stable of third party and own brands, and a disciplined approach to delivering sustainable growth.’
LACING UP FOR GROWTH
Footasylum operates 60 UK stores in prime high street locations as well as retail parks and malls, and sees potential for 150, targeting 8-to-10 new stores per annum.
The multi-channel business also has a fast-growing e-commerce platform and a recently launched wholesale arm for distributing its own brand ranges via a network of partners.
The company’s core fascia is Footasylum, each store fitted out in a distinctive style tailored to the local market and making use of video, music and photography to create a lively youth-friendly environment.
Footasylum also boasts two offshoot fascias in 7Liverpool and Drome. Additionally, it has a fast-growing e-commerce platform which represents the largest single ‘store’.
Shares will pore over the IPO prospectus in due course and give our take on the investment merits of the business, an interesting addition to the AIM fold.
Footasylum hasn’t confirmed how much it plans to raise or how much its existing shareholders are selling down. It will complete a share placing with institutional and professional investors to raise new money alongside the AIM listing, and the company’s share of the net proceeds will be used to fund growth investment.
Sales rose from £78m to £147m between the years to February 2015 and 2017, a compound annual growth rate (CAGR) of 37%. Over the same period, EBITDA surged from £2.2m to 11.2m, a CAGR of 126% higher to £11.2m.
E-commerce sales, Footasylum’s fastest growing route to market, rocketed up from £17.5m to £31.4m in the year to February 2016, building to £42m in the year to February 2017.
