Hotter parent reveals intention to float the brand on AIM by the end of the year

The parent of footwear brand Hotter had revealed its intention to float the business on AIM by the end of the year.

Electra Private Equity, which also owns restaurant chain TGI Fridays, announced in its half-year report today that it will be seeking "capital market solution" for both Hotter and TGI Fridays.

"It is our intention to demerge Fridays onto the FTSE Main Market late in the third quarter of this year and, subsequently, in the fourth quarter, to bring Hotter on to AIM through reclassification of the Electra entity. Plans are well advanced for both listings," Electra chairman Neil Johnson said.

Hotter has been undergoing a transformation of late to reduce its store portfolio and to increase its digital business. Johnson said it had "delivered the early stages of its plan following the accelerated delivery of its targeted operating model last year."

A CVA was approved in July last year to enable Hotter to exit 46 stores, taking its store estate to just 15 strategically placed stores. One that process was agreed, Electra invested a further £2m in the business to support the business transformation.

"Coinciding with the implementation of its new operating model, in October 2020 Hotter launched its 'freesole', 'cushion +' and 'stability +' product ranges ,which incorporate differentiating technology to meet customers' needs beyond the core brand promise of uncompromising comfort and fit. Hotter's product has continued to develop in 2021 with further focus on differentiating technology in the spring/summer range launched in late February.

"The optimisation of its operating model improves Hotter's situation and gives it the opportunity for growth as a digital direct to consumer business serving its existing UK and US markets, supported by a small, strategic UK retail estate. This leaves it free of the significant constraints imposed previously by its large retail network and the consequential impact on product range, margin erosion across channels and working capital inefficiency," Johnson continued.

Trading at Hotter's remaining 15 stores had been encouraging while they were able to open, Electra said, and online sales had grown significantly. In the seven months from October UK online sales grew 30% on the prior period whilst sales from digital partnerships grew 44%. Online sales in the UK and US contributed 68% of total sales over this period, up from 54% in the prior year on a like-for-like basis.

Over the same seven-month period EBITDA was 8% ahead of the proforma for continuing operations for the year to January 2020, which indicated full year proforma EBITDA of £5.4 million. This growth is despite the retained retail estate and retail wholesale partners being closed for 21 out of the 30 weeks in the seven-month period. Over this period the retained retail estate had negative EBITDA of £0.3 million.

Hotter targets the over-55 market with technology-led comfort footwear and is based in Skelmersdale.