The invisible hand of the recent market sell-off has left its prints all over the much-anticipated IPO of luxury and fashionable shoe designer and maker Jimmy Choo (CHOO). Priced right at the bottom of a price range that had extended as high as 180p initially, before being massaged down to 140p to 160p, demonstrates the waning appetite for new issues from under-the-cosh fund managers. At 140p, the company is valued at £545.6 million.
Investors should not be surprised. With the FTSE 100 index plunging close on 10% in just six weeks investors were bound to be cautious. That the high-heeled shoe retailer has gotten its flotation away at all would seem to be a victory of sorts against a backcloth of a worsening global luxury market climate, as flagged by both Burberry (BRBY) and Mulberry (MUL:AIM) within the past week or so.
Jimmy Choo was co-founded in 1996 by one-time Vogue accessories editor Tamara Mellon and its eponymous, then East End-based couture shoemaker. The self-styled '21st century accessories brand with shoes at its heart' is now owned by JAB Luxury, an investment house controlled by the billionaire Reimann family. Though Jimmy Choo hasn't raised any money, JAB Luxury has raked in £136 million net from the offer, yet still holds sway over 70.2% of the equity, possibly suggesting buyers were thin on the ground.
Since opening its first store in London, Jimmy Choo, a glamorous brand popularised by Carrie Bradshaw in television series Sex and the City, has grown rapidly and developed a global retail presence. Under Choo's niece and Creative Director Sandra Choi (pictured below), the brand has been successfully extended beyond women's shoes to include men's shoes, bags and fragrances.
JAB Luxury, which acquired Jimmy Choo in 2011, has invested heavily to scale the cash-generative business for its next phase of growth and margin expansion. The growth strategy involves a focus on delivering successful new product collections, driving like-for-like sales and opening 10 to 15 stores per year. Expansion into Asia, notably China, is a key plank of the strategy.
Jimmy Choo grew sales 15.8% to £281.5 million in the year to December 2013, driving adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) up to £46.9 million (2012:£46.1 million). You can glean further details regarding the growth strategy and financials by reading last month's intention to float announcement.
