Celebrity's favorite Hunter Boots has clinched a rescue deal following a sales plunge due to the coronavirus crisis. A further £16.5 million is being pumped into the business to keep it going through the crisis period.
The refinancing has been led by existing shareholder Pall Mall Legacy and supported by Searchlight Capital, Pentland, and other minority shareholders. As part of the recapitalization, existing lender Wells Fargo will also augment and extend its financing arrangements for a further three years. It all means that Hunter will actually have the benefit of an additional £18.5 million of capital, to support future growth.
Hunter is a brand that has a profile much higher than its size would suggest, helped by the aforementioned celebrity popularity and also the two royal warrants that it holds.
But it still faces huge challenges. The lockdown easing may have begun this month, but many of the events for which the company’s products are favourite purchases (such as festivals like Glastonbury) won't be happening this year. And that will extend the pain for the business that it has seen over the last few months.
Yet the brand does still seem to have a bright future with its finances now more sceure. Before the crisis, its fortunes had been improving and in its last set of full-year results, it swung to an operating profit of £7 million as sales reached a record £113.8 million.
Founded in 1856, Hunter is a progressive British heritage brand known for its Original boot. But today, it’s also a more diversified multi-channel, multi-geography business with a broad consumer reach and a wider product offering. In recent years, its e-commerce business has grown strongly, generating about 30% of global sales, positioning it to drive future growth. This e-tail strength would clearly have been part of its appeal to the backers who have put in the new financing.
The company said the recapitalization “will strengthen Hunter’s balance sheet, with the aim of withstanding the economic pressures of the current global Covid-19 crisis as well as to sustain it for the foreseeable future”.
Pall Mall Legacy is a Goldman Sachs-backed investment vehicle managed by Three Hills Capital Partners and will now be the majority shareholder of the company. Searchlight Capital is adding new funds too and retains a significant minority position and board representation. Pentland Group will also retain a minority shareholding and board seat.
Pall Mall first invested in Hunter in 2018 and said it “intends to bring new strategic and operational support to Hunter’s management through its team of senior retail industry professionals”.
The brand’s chairman Gordon McCallum said: “Very few British brands have gained such a notable presence in the UK, Europe, Japan and the US. Hunter boots are synonymous will quality and innovation, while also appealing to premium fashion-driven consumers. Since our original investment in 2018, we have been long-term believers in the potential for Hunter and continue to see great opportunities ahead.”