LONDON — Jimmy Choo is planning to move deeper into China as it readies for an initial public offering set for October on the London Stock Exchange.
On Tuesday, Choo’s parent, Joh. A. Benckiser Holdings, said it plans to float at least 25 percent of the company’s existing shares in a deal that values the British footwear brand at more than 700 million pounds, or $1.14 billion at current exchange.
The IPO announcement comes in the wake of the Scottish vote to reject independence and remain part of the U.K., which could unleash a wave of public listings in London for companies such as Virgin Money, United Biscuits and the automobile repair group RAC.
Choo’s decision also comes on the heels of the largest IPO ever by Chinese Internet behemoth Alibaba, in New York, and news earlier this month that Germany’s e-commerce titan Zalando is aiming to list on the Prime Standard of the Frankfurt Stock Exchange this year.
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Tuesday’s IPO announcement said scores of Jimmy Choo stores in Asia are in the pipeline. The brand plans to add to its current 120 directly operated stores by opening 10 to 15 units a year, in line with past strategy, mainly in China.
The statement said “half to two-thirds” of the new stores would open in China each year, and the expectation is that Jimmy Choo will boast at least 30 stores in China, from 10 today, within the medium term.
“We have expanded into Asia, but we are just at the beginning. It continues to be an open space,” said Pierre Denis, chief executive officer of Jimmy Choo.
The company said it is also mulling potential franchise buyouts and joint ventures in “incumbent fast-growing markets including the Middle East, South Korea, Singapore and Malaysia.” It will also explore franchise opportunities in new markets such as Latin America and Eastern Europe.
Overall, Choo is looking to triple its directly operated store presence to more than 300 units worldwide in the medium term.
Jimmy Choo principals remain undaunted by the sluggish growth of luxury leather goods sales, as seen in recent quarterly and interim results from groups such as Prada, Compagnie Financière Richemont, Kering and LVMH Moët Hennessy Louis Vuitton, all of which are competing in a similar footwear and accessories space as Choo.
Denis asserted that Choo is “operating in one of the fastest-growing segments” of the luxury market. He told WWD following the IPO announcement that Choo was one of only a few luxury footwear firms with the scale to compete globally — making it a compelling option for investors.
“We are a very attractive business, and the only [luxury footwear] company that can go for an IPO right now,” he said.
The statement said Choo is in year three of a five-year investment plan to upgrade supply chain and systems, including an online platform relaunch, new point of sales infrastructure and centralized warehouse, a SAP system and a product life-cycle management system.
Denis declined to go into detail about how the money raised from the IPO would be spent, and stressed that Benckiser would continue to control “at least 70 percent” of the company going forward, and that Jimmy Choo remained a long-term investment for them.
“We are a cash-generative company with strong like-for-like growth. Our expansion story is also about our like-for-like growth,” he said.
The company’s sales last year climbed 15.6 percent to 281.5 million pounds, or $439 million. In the previous year, the company notched a 17.1 percent sales increase, driven both by like-for-like revenue growth and store openings.
Revenue growth in the first half of 2014 was dented by the store renovation program, yet rose 9.4 percent on a constant currency basis, reaching 150.2 million pounds, or $251 million. Adjusted earnings before interest, taxes, depreciation and amortization was 27.6 million pounds, or $45.1 million, in the half.
Like-for-like revenue growth in 2012 was 6.1 percent; in 2013, 7.1 percent, and in the first half of 2014, 2.2 percent. Dollar figures have been converted at average exchange rates for the periods to which they refer.
The company said that following the listing next month, Jimmy Choo would be eligible to be considered for admission to the FTSE UK indices of top-performing stocks.
The board of directors in the new company, which will be re-registered as Jimmy Choo plc, will include Peter Harf, Bart Becht, Fabio Fusco, Olivier Goudet, Gianluca Brozzetti, David Poulter, Bob Singer and Judith Sprieser, as well as Denis and Jonathan Sinclair, chief financial officer.
Merrill Lynch International is acting as sole sponsor, sole global coordinator and joint book runner, while HSBC Bank plc is acting as joint book runner and BHF-BANK is acting as colead manager on the deal.
Benckiser, which also owns Bally and Belstaff, acquired Choo in a deal valuing it at 549 million pounds, or $889.4 million, in 2011. Previously, Choo was managed under Benckiser’s Labelux division, which was eliminated earlier this year.