The relationship between British women and their shoes seems to have intensified to new heights of passion despite the recession. Kurt Geiger, the upmarket shoe seller, has done rather well out of this, with turnover topping £162 million in the year to January 2010, up 22 per cent on the previous year.
Walking through the group’s Covent Garden flagship store, it is clear that the women who shop here are not coming to spend £100 on sensible mid-height heels for work. They are here for the ridiculously high wedge heels in a riot of colours or the five-inch platforms that would pose a real challenge on the cobbles outside. They want names such as the own-brand Kurt Geiger, KG by Kurt Geiger, or Carvela, or Gucci and Prada.
The original man behind the brand, Kurt Geiger himself, who opened his first store on Bond Street in 1963, has long departed. Neil Clifford has been in charge for seven years now, through three different owners: Harrods (he speaks highly of Mohamed Al Fayed); Barclays Private Equity, which backed a management buyout of the company in 2005, and the present proprietor Graphite, the private equity company.
Over lunch at Le Caprice, Mr Clifford says that the business has had a very good start to the year, with sales up 7 per cent between December and January. Shoe sales at Kurt Geiger tend to peak in October, when new boots, the company’s highest-priced products, hit the shelves. April is its second highest-selling, and usually the most profitable, month, as customers take their pick of the new summer offerings.
The company made a pre-tax loss of £3.2 million in the year to January 2010, 37 per cent less than it lost the previous year. This was partly caused by increased investment, and a £5.5 million preference share dividend payout, a tax-efficient dividend payment often used by private equity.
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Mr Clifford professes not to have much interest in shoes, although he proudly boasts that he got his C in O-level art by drawing a pair of melon green shoes in pencil.
“It’s now hanging on my mother’s wall,” he says. “I think there have been a few too many men trying to choose products in the footwear industry. In seven years I’ve never chosen a shoe. It’s not my business. The shoe industry has been run by too many men that are too old to be choosing product. I would never try to tell Rebecca [Farrar-Hockley, creative and buying director of the company] what to sell because she would tell me where to go. Our product is totally designed by the people that would wear it. That’s not normal in the footwear industry.”
The creative side of the business is taken care of by Ms Farrar-Hockley. She believes that Kurt Geiger has done well because of its close attention to trends. “We follow apparel really closely,” she says. “We create something quite random sometimes and it can end up being one of our bestsellers.
“When we see what’s doing well with consumers, we can do other versions, too.”
The creative team that designs for Kurt Geiger’s own-brand shoes comes up with 200 to 300 new pairs each month. In stores, they try to have about 25 per cent to 30 per cent of new designs each month, a turnover that is substantial for this end of the market.
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Mr Clifford says: “The amount of creativity is the reason why we hope we are doing well. About five years ago, the shoe industry was guilty of everyone looking the same. Everyone went to the same factories and bought the same shoes. We were guilty of it ourselves. We said we didn’t need designers, we just needed buyers and, actually, we do.”
Mr Clifford believes that the business has been better off during the recession because of its private equity backing. “We’re not always praying for December to be profitable or worrying about breaking lending covenants because we had had a bad year,” he says. “We have been genuinely lucky. We like the private equity thing. We had had a great run with Barclays in 2008. We were sad to see them go, and hoping we would be as lucky with finding a new partner. It was a sad moment getting on that train, like a Second World War film, but our relationship with Graphite is good.
“There’s a pretty good chance we will get to £20 million ebitda this year and they bought the business when it was making £10 million.”
Graphite has also backed the company’s ambitious expansion plans, including a £3.5 million investment in the new Harrods shoe department, and new stores around the UK and in the Middle East. Kurt Geiger stores are a staple of London airport duty-free lounges, which has helped to build recognition outside the UK.
Mr Clifford is bullish, but still worries about the future. He says: “We are all anxious about the coming year. At the moment, I just want to keep up the performance of the company — 20 per cent every year for seven years. But you’re only as good as your last balance sheet.”
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CV
Education Mayfield School, Portsmouth, left with a C in O-level art
1983-1993 Started as suit salesman in Debenhams Southsea through to senior positions in both retail and product functions
1993-95 Two years of travel
1996-2002 Joins Kurt Geiger as retail director, then marketing, then buying and merchandising, and then managing director. Reports to the Fayed family
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2002-04 President of Bally shoes, based in Switzerland, as part of TPG-appointed turnaround team
2004-present Chief executive, Kurt Geiger. Returned to lead management buyout from Harrods with Barclays Private Equity. In 2008 led secondary buyout by Graphite
Family Married with three children
Q& A
Who, or what, is your mentor?
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Mohamed Al Fayed. He’s got a memory like an elephant and he would tell you bluntly during negotiations to stop wasting time
What was the most important event in your working life?
The Harrods management buyout
Does money motivate you?
It’s good to have
What gadget must you have?
My BlackBerry
How do you relax?
I have a season ticket for Old Trafford. I also buy old bangers and do them up. I’ve got 13