The private equity firm Graphite Capital has sold Kurt Geiger to American retail outfit Jones Group, owner of the Nine West brand - just three years after buying it for £95m ($187m at the time). That’s a hefty profit, and shows that while getting involved in retail these days may seem crazy, the opposite is true if you’re at the glitzier end of the market.
Indeed, only a couple of weeks ago we were writing about Jimmy Choo being sold for £500m – nearly three times what its private equity owner paid for the shoe designer four years before. Such success is largely driven by the soaring demand for luxury goods in fast-growing emerging markets like China, while British consumers are turning towards a polarised style of shopping – scrimping in many areas while still splashing out on the odd treat.
Global sales in luxury goods are expected to have risen by 12% to a record €172bn in 2010 and forecast to increase a further 7% this year to €185bn, according to Bain & Company. So while those private equity cats may have a reputation for tearing the shirt from your back, they certainly know what they’re doing when it comes to shoes. Under Graphite's ownership, Kurt Geiger’s revenues leapt by 70% to £205m in the year to April 2011.
Kurt Geiger is now Europe’s largest luxury shoe retailer, and has new outlets in Russia, Turkey, Dubai, Kuwait, Qatar and Bahrain. The sale to Jones, a retailer, will mean a major change of pace after several years of ownership by various private-equity groups. For one thing it will give Kurt Geiger a platform to expand into Asia and the US, where Jones has some 700 stores.
Kurt Geiger’s senior management should be happy. They’ll be sharing a windfall estimated at £20m while the rest of retail is notably down at heel.