Marilyn and Yoram Anselm founded Hobbs in 1981 and have created a

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Marilyn and Yoram Anselm founded Hobbs in 1981 and have created a Powered By Docstoc

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Company background and history
Founded in 1981, Hobbs is a vertically integrated business, which designs,
manufactures and retails contemporary ladies footwear and garments. The original
vision of the owner designer Marilyn Anselm, followed to this day by the design and
creative teams, was to create a fashion company with values rooted in the traditions of
the English countryside.

The furniture and decor of the shops is updated on a regular basis to ensure that while
the values and principles of the original concept are upheld, the appearance of the
shops never becomes dated or old-fashioned. However, a substantial part of the
shopfit remains timeless and therefore can be prudently written off over ten years.

The company represents a quintessential English look but at the same time is
contemporary with a strong emphasis on design, quality and value.

The success of Hobbs was founded on the creativity and energy of Marilyn Anselm
who developed the concept of Capsule Wardrobes. This idea which has been further
developed by the design team led by Karl Henry involves integrating the clothes,
shoes and accessories. The garment collection, shoes and accessories work together
and can be interchanged.

In twenty years Hobbs has developed a loyal clientele among modern women and
created a complete contemporary wardrobe for them to complement their lifestyles.
Hobbs designs are known for their perfect cut, flattering lines, luxurious materials,
sense of humour and for their ability to make the wearer feel effortlessly sexy. Each
season the offer is specifically designed to appeal to a broad spectrum of tastes and
needs, ranging from elegant country wear, smart office suiting and separates,
glamorous eveningwear and contemporary high fashion garments.

On 23 December 2002 a management buy out (MBO) was concluded for a purchase
price of £30m supported by Barclays Private Equity and Leveraged Finance

The senior management team is made up of Tony Campbell (Non executive
Chairman), Nick Samuel (Chief executive), Mike Trotman (Finance Director), Mike
Spearing (Retail and operations Director), Karl Henry (Design Director), Nick
Standish (Merchandising Director) and Sarah Davey (Training Director).

At end April 2004, Hobbs will be trading from 35 stores, 15 concessions and 2 factory
outlets. Our current turnover breakdown is 74% clothing, 24% footwear, 2%
Hobbs group structure following the management buy out on 23 December 2002

               Private Equity

                            80%                              20%

                                      Hobbs Headco Ltd

                                         Inocho 2748
      Shareholder loan                    Ltd

                                         Inhoco 2756
                                          Ltd                          Barclays Leveraged Finance

                                Hobbs di Inghliterra   Tomaificio Aurora Srl
    Peace and Quiet Ltd                                                        Hobbs Ireland
      and subsidiaries                         Srl

•          Hobbs Headco has share capital of £450,000.
•          Inhoco 2748 has a shareholder loan of £14.6m repayable in 2010
•          Inhoco 2756 has senior debt of £18m repayable in 6 years
•          Peace and Quiet Ltd is and remains the direct parent company of the Hobbs
           trading company
•          Hobbs di Inghlitera Srl and Tomaificio Aurora Srl are Italian shoe factories
           brought into the legal group as a result of the MBO.


The main part of the business representing 73% of the turnover is made up of the sale
of garments, which comprise tailored jackets, suiting, skirts, trousers (all designed in
house) and complementary knitwear. The design team travels extensively, visiting all
the major trade and fabric exhibitions in order to choose fabrics and to pick up on the
latest trends and influences on designers. This ensures that the designs are up-to-date
and whilst following the recognisable Hobbs signature, adds a fashionable twist to the
classical look of the clothing.
There are two main seasons per year with two smaller transitional seasons. Each
Spring/Summer season comprises approximately 580 garments and 320 shoe options
and each Autumn/Winter season comprises approximately 210 garment options and
290 shoe options.

The trades predominately in the UK but since 2003 has opened three small
concessions in Ireland.

The Hobbs Card

The "Hobbs Card", useable only in the UK, is provided by Clydesdale Financial
Services. The terms and benefits for cardholders are described at Annex A (Hobbs
Promotional Material: "Treat yourself to the New Hobbs Account Card"). Hobbs
switched providers from the Royal Bank of Scotland (Style card) in December 2003.

Market & Competition
The Market

According to Retail Rankings 2001 (Corporate Intelligence Group) the total spending
in 1999 on garments was worth £22billion (excluding garment purchases outside
clothing specialists) and the total spending on shoes was £3.4billion. KeyNote, the
market research company, reports the women’s clothing market (including girls’ and
infants’ clothing) to have been worth £18.4billion in 2001 and the total footwear
market to have been worth £4.9billion.

The Hobbs target customers are ABC1 (UK rating) women between 25 and 45 years
old who seek style, quality and value in their fashion purchases. In fashion terms she
is exacting and demands contemporary styling, luxury fabrics and competitive price

The UK women’s outerwear market is competitive, fuelled by:
   • the presence of quality retailers, such as Karen Millen and Jigsaw;
   • the arrival of new retailers such as Matalan, Zara, etc;
   • changing customer attitudes and habits;
   • cost increases outstripping sales growth.

The net effect has been
   • polarization – between the “value retailers” and the “niche retail brands”;
   • the re-definition of the middle market with Next emerging as the benchmark in
       place of Marks & Spencer and Gap;
   • consolidation and fall-out of those retailers without a compelling and
       consistent customer proposition.

The market-positioning map (TNS/Management) below highlights the relative
positioning of the major retailers by age and price.
                             the UK womenswear market - market positioning
                      300                         Karen

                                                                              Hobbs <estimated>
                                                                              Hobbs <estimated>
                                                                                                                     John Lewis
                                                                                                                     John Lewis

                                                Ted Baker
                                                 Ted Baker
                                 Morgan         <estimated>
                                                 <estimated>                                                                      HoF
                      200                                                                                        Laura
                                           French Connection
                                           French Connection                                  Monsoon
average price index


                             Kookai Warehouse
                             Kookai Warehouse                        Zara
                                                                     Zara                                          Debenhams
                                                                                                                   Debenhams              M&S
                                                       Oasis                                                                              M&S
                                                                                Next      Principles
                                                                                          Principles    Wallis
                                  Top Shop
                                  Top Shop           River
                                                     River          Gap
                                                                    Gap                                                   BhS
                                                                                                                          BhS               Littlewoods
                             Miss                                                                               Evans
                             Selfridge                                Etam      Dorothy                  Matalan
                                         Pilot   H&M
                                                 H&M                  Etam      Dorothy

                                                         New Look
                                                         New                                                     Peacocks

                                                                                average age of buyer                                    source:TNS
                            20                             30
                                                           30                              40
                                                                                           40                               50
                                                                                                                            50                      60

Hobbs occupies an area of the market which is insulated to an extent from the highly
competitive nature of the more fashion focused mid-market. As a consequence, the
Company is able to charge higher prices for product and develop a wider offering to
consumers. Price positioning is not rigidly fixed against the competition but is
constantly assessed and aimed to be broadly in line with Jigsaw and Karen Millen.

The Hobbs business model is to drive an increasingly profitable retail brand through a
premium positioning whereby the higher prices – and margins – are justified by the
desirability and relative exclusivity of the product. A retail brand is able to form an
emotional link with its customer and the brand identifies not only her needs but also
her wants and offers her a differentiated, targeted and totally relevant product range.
When a brand is successful, it can offer its customer more than just the core product



“Treat yourself to the New Hobbs Account Card”

“The new Hobbs account card offers greater flexibility in how you purchase your
wardrobe and the ways in which you pay for it.
Option 1: Spend £200 or more and enjoy 6 months Interest Free, with the choice of
either clearing your balance by the end of the 6-month period (either with one
payment or several) or alternatively spreading the cost (See option 3).

Option 2: When you spend less than £200, enjoy up to 56 days Interest Free. Settle
your account with just one payment, on receipt of your monthly statement, or spread
the cost (See option 3).

Option 3: Spread your payments, with a minimum payment of £5 or 5% of the total,
whichever is the greater. If you choose not to clear 6 months Interest Free transactions
in full, interest will be charged to your account on the outstanding balance remaining
AFTER this period, at the rate of 2.2% per month (APR 29.8% variable). Option 2
transactions not cleared by the due date will attract interest at the rate shown above on
the average daily balance of the account, from the date of purchase.

Minimum Spend: A minimum spend of £75 is required to open an account. Once the
account is open, there is no minimum spend.

Statements: Statements are sent each month to customers with outstanding
transactions, including details of any Option 1 transactions due for settlement at a
later date.

Payment: Each statement incorporates a giro payment slip that can be used to make
payments at a Bank or Post Office, or to accompany a cheque posted directly to
Clydesdale Financial Services. Alternatively you can sign a direct debit that will
ensure your minimum monthly payment is collected, provided sufficient funds are
available in your account.

Terms and conditions apply
Applications subject to status
Written quotations available upon request
Applicants will need to provide 2 forms of ID on application (a driving licence and
some form of bank issued card would be ideal) “

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