Log on to Youtube.com and search for 'complex sneaker videos'. The results speak to a growing trend among millennials who seemingly enjoy watching 10-minute videos following celebrities like model Bella Hadid and rapper 50 Cent shopping for – you guessed it – trainers. These videos get millions of hits and doubtless drive significant custom for footwear retailers.
Understanding that this sort of footwear is becoming increasingly coveted by young shoppers provides insight into the latest retail market listings, specifically recent float Footasylum (FOOT). Investors might be familiar with the success of sportswear retailer JD Sports (JD.) and the good news is that John Wardle and David Makin – the group’s original founders – are heavily involved with this latest venture. Having helped set up JD Sports in 1981, Mr Makin launched Footasylum in 2005, with Wardle joining three years later. True, they’re likely to have earned themselves a generous payday via the IPO, but both intend to remain invested with the group. Mr Wardle will also continue to serve as chairman until former JD Sports chief executive Barry Brown takes over next summer. Chief executive Claire Nesbitt – the youngest boss of a London-listed UK company – succeeded Mr Wardle in the role in 2015 and is, incidentally, David Makin’s daughter.
That brings us to another market newcomer, Quiz (QUIZ). On admission, its shares rose by a fifth, handing the group a market capitalisation of £245m compared with original estimates of £200m, implying there’s still appetite among investors for new fashion listings in the retail sector. But since the July float, the shares have fallen steadily despite Quiz’s clear differentiation from existing peers. Unlike Boohoo (BOO) and Asos (ASC), it simultaneously runs on and offline operations and pitches prices at the upper end of the affordable range. Product is heavily weighted towards occasion wear and targets female consumers within a specific age range. Coincidentally, JD’s executive chairman, Peter Cowgill, also serves as non-executive chairman at Quiz.
Footasylum joined the market only three months later than Quiz. So the question is, is another millennial-minded retailer worth the investment? Like Quiz, shares in Footasylum jumped following last week’s IPO. Admitted at a price of 164p, the shares currently trade just north of 200p, representing a 23 per cent gain in only a week’s trading. It also managed to raise around £43m in net proceeds, which will be used to pay down preference shares and a loan made to the company by Mr Wardle. Anything left over will be put towards new store openings.
Footasylum is a minnow in terms of market capitalisation compared with larger rival JD, but it’s doubtless going to face similar market pressures. Price inflation has put pressure on household incomes, and as wages continue to stagnate there’s no guarantee of a bumper Christmas this year. Indeed, non-food sales growth slowed to just 0.2 per cent in October, the lowest rate on record.
But Peter Smedley at Panmure Gordon says results from the likes of Nike, Adidas, Puma, Foot Locker and even Sports Direct (SDI) indicate that the 'athleisure' trend is here to stay, adding that the athletic footwear cycle remains strong in the UK and Europe. The core customer – determined to be a male aged between 12 and 25 years old – is resilient in his view, while demand is driven by “must-have fashion” rather than by wider consumer patterns such as unhelpful weather or weak footfall numbers. However, the key to success is building excellent relationships with top sports brands, convincing them that high-street shops are crucial fascia through which to connect to customers.
