STRONG sales at Scottish footwear chain Schuh are driving profit upgrades at its US owner Genesco and boosting its management team’s chances of securing a windfall of up to £25 million.
Genesco, which paid £100m up front to buy the Livingston-based company last summer, has raised its profit outlook for the second time this year after a strong performance at Schuh stores helped boosted quarterly sales.
Under the purchase deal, a bonus of up to £25m is payable to certain members of the management team in 2015 based on performance over the four years following the deal.
Last week, New York-listed Genesco said Schuh stores contributed $81m (£51m) to its second-quarter sales of $543.5m. Like for like sales at Schuh, which has 83 stores and concessions in the UK and Ireland, increased by 9 per cent in July compared to recent sales growth of between 2 per cent and 6 per cent at Genesco’s other chains, which include Journeys.
Schuh’s continuing progress has led Genesco to pencil in 17 store openings in the year ahead out of 116 across the group.
“The average Schuh store sales are roughly four times the average Journeys store so 17 new stores represents significant growth,” pointed out chief executive Bob Dennis following the company results.
When the deal to acquire Schuh was announced, Dennis described the Schuh business as “financially compelling with attractive store economics and solid growth prospects”.
Under the deal, employees shared around £37m. The staff, whose average age is 21, received an average of about £16,200 depending on how long they had worked at the company.
The firm’s majority shareholders, managing director Colin Temple and finance director Mark Crutchley, led a management buy-out of the business in 2004.
As well as ensuring staff received significant windfalls from the deal, Temple and Crutchley, who remain at the helm of the company, donated £7m to a new charitable foundation. Schuh was founded as a single shop in Edinburgh’s North Bridge Arcade in 1981.
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