Jones Group buys British luxury shoe retailer Kurt Geiger from Graphite private equity firm
Kurt Geiger's senior managers will share a £20m windfall after the British footwear retailer was sold to an American retail group for $350m (£215m) yesterday.
In a further sign that the luxury goods market is booming while the high street stagnates, the private equity firm Graphite Capital sold Kurt Geiger to Jones Group, the US owner of Nine West, just three years after buying it for £95m – turning a profit of about £120m.
The sale comes less than a fortnight after shoe designer Jimmy Choo was bought for £500m by investment firm Labelux, the luxury goods group backed by Germany's billionaire Reimann family, nearly three times the sum that was paid by its private equity owners four years ago.
The senior management of Kurt Geiger, led by chief executive Neil Clifford and buying and creative director Rebecca Farrar Hockley, will stay in place and retain an undisclosed stake in the retailer, which Graphite acquired from rival Barclays Private Equity in February 2008.
Clifford declined to comment on the size of the management's windfall , although he did concede "there are a few smiling faces at Kurt Geiger today".
Graphite and Kurt Geiger's management team have benefited from soaring demand for luxury goods as fast-growing emerging markets develop a taste for the high life and British consumers adopt an increasingly polarised approach to shopping.
Markus Golser, senior partner at Graphite, said: "The growth is largely being driven by demand from the Middle East and Asia. But closer to home, consumer patterns are changing, with people increasingly opting for discount retailers and luxury goods – and squeezing out the middle players."
"UK shoppers are becoming more cost-conscious but they decide to treat themselves from time to time," Golser added.
Under Graphite's ownership, Kurt Geiger has seen significant sales growth, with revenues jumping by 70% to £205m in the year to April 2011.
This comes against a backdrop of a booming market for luxury goods, with global sales expected to have risen by 12% to a record €172bn (£152bn) in 2010 and forecast to increase a further 7% this year to €185bn, according to research by Bain & Company.
Now Europe's largest luxury shoe retailer, Kurt Geiger benefited from opening 24 stand-alone stores in Britain as well as new outlets in Russia, Turkey, Dubai, Kuwait, Qatar and Bahrain.
The sale to Jones will give Kurt Geiger a good platform to expand into the US and Asia, while serving as a "hub" for the American retail group in Europe.
Clifford said: "I'd be very disappointed if we didn't see Kurt Geiger opening in America next year. Jones Group is huge in America – they've got 700 stores, while we've got none, and we've never had the bottle to try it before."
Clifford said New York, Dallas and Los Angeles would be suitable US locations for Kurt Geiger stores and said he was also hoping to open outlets in Asia, in cities such as the South Korean capital Seoul.
After working under two private equity owners, Clifford said he would relish the longer-term perspective implicit in control by a retail group.
"We've had a brilliant ride with private equity but now we'd like to park the company for the long term and not look over our shoulders every three or four years. It's been a great journey but we now want to think about the next 10 years," Clifford added.
Richard Dickson, president of Jones Group, said: "By leveraging our deep retail networks worldwide, there is substantial opportunity to grow Jones' revenue base internationally and to introduce Kurt Geiger's brands to the US."
In addition to selling through its standalone outlets, Kurt Geiger's four brands – Kurt Geiger, KG, Carvela and Miss KG – are also available in department store chains such as Harrods, Selfridges, House of Fraser, John Lewis and Liberty.