After a tumultuous year for the industry, some retailers are setting their sights on new horizons with plans to float on the stock market.

Throughout the pandemic, while many retailers have suffered, others – typically online businesses – have benefited from shifts in customer behaviour, boosting sales and brand awareness. Now they are targeting IPOs.

They hope to follow in the footsteps of The Hut Group, which last year famously completed a £5.4bn stock market flotation, raising £1.88bn in the largest IPO since 2015.

Sales at the digital health and beauty business soared as customers bought their supplements and beauty products online. The Hut recorded a 51% revenue jump in its most recent quarter to December 31, 2020. 

Retailers with similar success stories will likely want their time in the sun and, following the growth of online shopping during the pandemic, investor appetite has been whetted.

HSBC head of retail James Sawley says: “With interest rates and bond yields offering low returns, investors are looking to the equity markets.

“The pandemic has accelerated consumer trends, such as the growth in direct-to-consumer, convenience and personalisation, and therefore companies in this space are looking to the public markets as they have a great story to tell investors.”  

Retail Week explores the retailers that may float this year.

Moonpig 

Moonpig screengrab

Greetings card and gift group Moonpig is targeting a £1bn valuation on the London Stock Exchange after demand for its products surged during lockdown.

With bricks-and-mortar stores closed for the best part of 2020, Moonpig benefited from an influx of customers wishing to celebrate with loved ones they were unable to see.

The retailer notched up revenues of £156m in the six months to October 2020 and claimed to have a 60% share of the UK online greetings card market.

Through its IPO, the group hopes to increase its customer base and position itself as a technology company, rather than simply a retailer, using its customer data and predictive technology.

High street competitors, including Paperchase and Card Factory, have seen sales decimated during the pandemic, with Paperchase filing for administration earlier this month.

However, while Moonpig may have been popular over the past year, news of a Covid-19 vaccine and hopes for an eventual return to normality may impact its long-term success, according to one analyst.

Only 10% of greetings cards were bought online in 2019 and, while that is predicted to grow to 20% in 2021, the reopening of bricks-and-mortar stores could have a dampening effect.

Moonpig is chaired by Kate Swann, who is hugely respected for her former roles leading WHSmith and SSP. Her involvement is likely to enhance investor appeal.

Dr Martens

Dr Martens

After seven years under the ownership of private equity firm Permira, it seems somewhat natural for Dr Martens’ next step to be to go public, but some analysts have their doubts.

Shooting for a £3bn-plus valuation, Permira is seeking a return of 10 times on its £300m purchase of the shoe brand in 2014. 

That figure is also 4.5 times its £672m sales in the year to March 31, 2020, and 16 times its £185m EBITDA – a lofty aspiration.

Permira is set to list Dr Martens on the premium segment of the London Stock Exchange, but the firm has had a rocky time with some of its previous listings. Both over-50s specialist Saga and motoring association The AA were floated in 2014 with disastrous results. 

However, despite the majority of its wholesale clients’ and its own stores being closed worldwide, Dr Martens achieved success throughout the pandemic, building on its  growth over the past few years – and its ecommerce arm is soaring. 

The iconic shoe brand sold 5.5 million pairs in the six months to September 30, up from 4.8 million a year earlier, and revenues rose 18.4% to £318m.

The retailer said it believed its direct-to-consumer approach was crucial for the future of the business, contributing 34% of the group’s revenue, 24% of which was online in the same six-month period.

Chief executive Kenny Wilson is seeking to increase sales outside its domestic UK market, as well as expand its own retail operations.

The IPO is likely to attract attention from investors worldwide, but some analysts believe it may be overpricing itself.

Mytheresa

My Theresa screenshot

Munich-based ecommerce company Mytheresa has launched its American IPO, which could win it a valuation of between £1bn and £1.5bn.

Morgan Stanley and JP Morgan are acting as joint bookrunners for the company.

Mytheresa sells products from 250 luxury brands, such as Gucci, Prada and Givenchy, to customers in 140 countries and has benefited from the online shift seen during 2020.

The etailer’s revenues jumped 20% in the full year ended June 2020, reaching €450m (£402m).

Shares of its rivals Farfetch quadrupled in the US throughout the pandemic, indicating that Mytheresa could see similar success.

Deliveroo

Deliveroo bike

With consumers stuck at home and hospitality venues shuttered for the best part of 2020, Deliveroo’s popularity has skyrocketed.

The food delivery app could achieve a valuation of as much as £4bn in one of the most anticipated IPOs of 2021.

Deliveroo has appointed a swathe of Wall Street titans to aid the listing in the first quarter of 2021, including JP Morgan and Goldman Sachs.

After continuously registering losses since its conception in 2013 and as it sought to scale up, Deliveroo reports that it has now been operating profitably since July 2020.

Throughout last year, the group used the $575m investment from backers including Amazon to develop its tech platform and user experience, as well as building dark kitchens to expand its offerings.

During the pandemic, Deliveroo also moved into new services such as grocery delivery, partnering with retailers including M&S, Morrisons and Aldi, and now has more than 45,000 restaurants on the platform.

Deliveroo’s ‘unicorn’ status is likely to see it soar on the stock market, boosted by the continued closure of hospitality businesses in the future and the increased demand for home-delivered meals.

In The Style

In The Style 1

Fashion etailer In The Style is thought to have been mulling a flotation that would value it at £100m.

Founder Adam Frisby, who launched the brand from his bedroom in 2013, is understood to have appointed bankers from Liberum to advise, ideally targeting a listing on AIM in the first half of 2021.

Despite the troubles afflicting many apparel players during the Covid outbreak, In The Style has had a strong year, like competitors such as Boohoo and Missguided, capitalising on its ability to react to lockdown trends and provide fashion on a budget.

The retailer also makes the most of celebrity collaborations to boost its appeal, using reality stars and influencers’ credentials to improve its own social media presence.

In its latest results for the 13 weeks to December 31, In The Style’s sales soared 169% year on year to £13.5m, while customer numbers grew by 45%.

Frisby has also been building the company’s leadership team in preparation for the IPO, poaching Missguided’s former chief financial officer Paul Masters to take on the role of chief operating officer.

Both Asos and Boohoo have delivered success since listing on AIM, and with fast fashion’s eternal appeal to the youth market, In The Style is likely to follow in its peers’ footsteps. 

Beauty Bay

Beauty Bay website

Following in the footsteps of rival The Hut Group, Beauty Bay hopes to capitalise on the shift to online seen in the last year.

The beauty marketplace, which sources and sells hard-to-find brands such as Anastasia Beverley Hills and The Ordinary, has been mulling a stock market flotation with the help of investment bank GCA Altium.

Sales have skyrocketed during 2020, up 50% year on year to £120m on an annualised basis according to Sky News, which reported its IPO plans. The retailer is unlikely to list until the second half of this year.

Other options being examined include an outright sale, but if The Hut Group is anything to go by, Beauty Bay could do well if it chooses to list.

MusicMagpie

Music Magpie

‘Recommerce’ site MusicMagpie is planning an IPO for 2021. Peel Hunt and Shore Capital have been appointed to lead the float.

MusicMagpie, which is currently backed by private equity firm NVM, has won trade during the pandemic as one of the biggest recyclers of consumer electronics, benefiting from consumers’ desire to declutter their homes and make some extra cash.

The business pays customers for their unwanted electrical products, such as DVDs, mobile phones and games consoles, recycling and reselling roughly 95% of them and using parts from the other 5% for refurbishments.

Since its inception in 2007, MusicMagpie has grown to be the biggest third-party seller on both Amazon Marketplace and eBay, as well as selling through its own platform.

It previously considered an IPO in 2018, but elected to remain privately owned.

Off the back of its pandemic success, and an increase in consumer interest in sustainability, its circular business model under the ‘Smart for you, smart for the planet’ motto could be attractive to investors.