It was probably well deserved. The stress and effort involved in an MBO can be monumental. The transition from manager to part owner is one that sends chills down the spines of most executives. The due diligence alone is enough to send mere mortals to an early retirement.
But Samuel has spotted a good business and did not enter the venture alone. Of course it takes a good eye to spot an MBO opportunity and in the fickle fashion industry, that vision has to be even more astute.
Hobbs is well placed. By no means cheap, it provides professional and well-to-do ladies with classic standards often set off by a fashionable twist. Its tailoring is the mainstay of many a female executive while its shoes have been popular since it was founded in 1981.
Its 60 branches are to be found on high streets in well-heeled areas and their reliability is founded on a collection that delivers season upon season. The prospects for Samuel, an ICAEW member, are therefore good and the help from Barclays Private Equity in the #30m deal will be more than helpful.
The question now is whether Samuel will be good for Hobbs. If his track record is anything to go by, he probably will. He comes to the MBO with a wardrobe full of successful experience in the rag trade. Samuel has been with Hobbs just over a year, but before that he was with fellow upmarket high street brand Karen Millen. Pitching at a younger market, Millen was also built on above-average prices and quality.
It seems to have been a model Samuel liked. He was with the company for ten years – a period which saw turnover rise from £1m to £55m. Now Samuel has an even greater interest in making Hobbs work and grow. His 4% stake in the company stands at £1.2m and even as the MBO was being finalised, the former FD was happy to tell the world profits should see a ‘very significant’ increase on the previous year’s £3.8m.
But the fashion world is fickle. Samuel is clearly confident, or at least appears confident in public, but he will have to take care. Though he plans to open up to eight more stores this year, tastes can be fickle and sales sensitive to even the smallest changes in the marketplace.
That said, what Samuel is betting on is the astonishing number of customers, 80%, who are repeat buyers. Loyalty like that brings a certain amount of reassurance. Which is handy because Barclays, his biggest investor, will surely want a decent return on its money.
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