London, UK, 7 February 2022

Unbound Group (UBG): Initiation - A platform for growth

Unbound Group's aim is to capitalise on the strengths of and customer loyalty to the current core trading business, Hotter Shoes, a digitally led retailer, by developing a curated multi-brand retail platform, 'Unbound'. The platform will offer a broader range of new and complementary own-brand and third-party products and services, via partnerships with relevant brands, in order to enhance the company's addressable market. The company's core target demographic, people aged 55+, is the wealthiest, has the highest level of disposable income and is expected to be the fastest growing of any age group as the population ages, providing a favourable tailwind to management's ambitions.

Our DCF-based valuation, which excludes any potential new revenues from the new digital partnerships, suggests an equity valuation of £70m or 165p per share. Despite our estimates for higher growth in revenue and operating profit versus the UK online and small-cap retail peers, the P/E multiples for FY23e and FY24e of 15.0x and 6.9x are at a discount to the UK online retailers in both years (21.4x and 18.4x) and a discount to the UK small-cap retailers in FY24e (8.5x). 

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