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HOBBS LTD: INITIAL SUBMISSION
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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%
accessories.
Hobbs group structure following the management buy out on 23 December 2002
Barclays
Management
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
Notes
• 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.
Markets
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
points.
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
300 Karen
Karen
Millen
Millen
Hobbs <estimated>
Hobbs <estimated>
John Lewis
John Lewis
Jigsaw
Jigsaw
Ted Baker
Ted Baker
Morgan
Morgan <estimated>
<estimated> HoF
HoF
200
200 Laura
Laura
French Connection
French Connection Monsoon
Monsoon
average price index
Ashley
Ashley
Kookai Warehouse
Kookai Warehouse Zara
Zara Debenhams
Debenhams M&S
Oasis M&S
Next
Next Principles
Principles Wallis
Wallis
Mango
Mango
Top Shop
Top Shop River
River Gap
Gap BhS
BhS Littlewoods
Littlewoods
Island
Island
100
100
Miss
Miss Evans
Evans
Selfridge
Selfridge Etam Dorothy Matalan
Matalan
Pilot
Pilot H&M
H&M Etam Dorothy
Perkins
New Look
New Peacocks
Peacocks
average age of buyer source:TNS
0
0
20
20 30
30 40
40 50
50 60
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
range.
ANNEX A
HOBBS PROMOTIONAL MATERIAL
“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) “
