Hotter Shoes in M&S deal as yearly sales jump
Comfort footwear brand Hotter Shoes had news of annual sales “significantly” ahead of last year on Thursday and the signing of a deal with M&S that shows the now-online footwear specialist for the 55+ market is heading in the right direction.
Parent Unbound Group, which listed its shares on AIM just this month, called the new deal to list Hotter Shoes on the ‘Brands at M&S’ platform “further testimony to the brand’s attractiveness to other best in class retail platforms”.
Hotter launches on M&S.com today, initially offering 32 products centred around comfort and active footwear for men and women, later increasing to 75 SKUs available directly via its website, it said.
And expect more signings. Already working with John Lewis, Next and The Very Group, Hotter said it’s also in discussion “with a number of future partners with a target launch in summer”.
In its trading update, it said Hotter Shoes continues to build on the brand’s strengths and customer loyalty following its recent transformation under a new management team “to become a digitally-led retailer of comfort shoes with a growing (currently 4.6 million) customer database”.
Following that transformation, Unbound said performance “continues to improve” with Q4 delivering a 10% increase in revenues compared to the same quarter in the prior year. It also achieving a gross margin above 61%, “accomplished despite headwinds from Covid and supply chain challenges, though the latter improved and stabilised somewhat during the quarter”.
That meant revenues for the year ended 30 January came in "significantly ahead of last year” up 16% to £51.9 million, “despite the significant challenges impacting the sector, particularly during the second half”.
It noted the double-digit percentage revenue growth is being achieved in both the digital and traditional retail channels.
At the same time, Hotter also achieved significant increases in average selling prices in FY22 of over 16% compared to the prior year, and an improved gross margin to above 63%, an increase of over 9 percentage points from FY21.
Meanwhile, the brand has also seen a “rapidly accelerating capture” of email addresses, growing by over 35% in FY22, taking its e-mailable database to over 1 million from 767,000 a year ago.
On the earnings front, Hotter is expected to generate adjusted EBITDA of around £5.5m for FY22, overturning FY21’s loss of £0.9 million. Profit before tax and exceptional items for the year is anticipated to now be below £0.2 million, a marked improvement compared with the prior year loss of £6.6 million.
In addition, the business said it has significantly improved its net debt position, with banking net debt reducing by over £6m to £8.5m as of 30 January. Looking ahead, management said it is “confident in achieving the medium-term growth targets”.
Specifically for Hotter, though supply chain disruption has been a challenge during H2, its UK manufacturing facility “provided a level of resilience and availability improved during the final quarter of FY22".
Its SS22 collection also launched in February, “with inventory on plan and at optimum levels”.
From an Unbound Group perspective, strong progress has been made in developing the new multi-brand e-commerce platform with a launch planned for this summer.
CEO Ian Watson said: “I am delighted that the progress we have made in resetting Hotter continues to be translated into improved financial performance and momentum.
“The development of the Unbound Group platform is also gathering pace, we have strengthened the management team and we are currently engaged in positive discussions with a number of potential partners.”
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