Unbound Group, the owner of Hotter Shoes, has announced that it has entered into a sales process after it carried out a strategic review in light of declining revenues.
According to Unbound, the trading position in the second half of 2022 had left it with cash constraints, forcing its board to seek additional funding to help complete restructuring and ensure long-term profitability.
The group’s ongoing debt service requirements, including one million pound capital repayments due in July 2023 and January 2024, mean that any underperformance could result in a worsening cash position, with the repayment in January 2024 especially under pressure.
For these reasons, and considering potential damage to any future growth prospects, the group said it decided to initiate a formal sale process, alongside a formal review of other strategic options available.
Interpath Advisory has been appointed to act as a joint financial advisor alongside Singer Capital Markets Advisory, each tasked with managing both processes.
While the company noted that it had not yet been approached by any interested parties or was in any discussions, it added that it was also seeking a strategic investment as an alternative to the sale.
Unbound ceases US and EU operations, looks into evolving product portfolio
The news comes after Unbound’s board carried out a review of the company’s operating structure in a bid to streamline activities and simplify processes, including the broadening of its product ranges, developing its trading platform and outlining the future of its US business.
Furthermore, Unbound also initiated a cost reduction programme, which it said would result in annualised cost savings of around 2.3 million pounds, now estimated to be achieved by Q3 of FY24.
In response to its review, Unbound recentred its focus around its core Hotter brand within the UK market while planning out the evolution of its product portfolio to offer more choice. The group has also closed its loss-making direct-consumer sales in the US and EU, which had contributed to 11 percent of its revenue in FY23, as well as its own multi-brand platform.
These decisions came following the withdrawal of a possible 10 million pound investment by Marwyn Investment Management earlier this week, after Marwyn said there were “concerns over current trading”. Unbound reported a “challenging” Q1 environment for the beginning of 2023, with “conditions worsening compared with those outlined in the FY23 trading update”.