What to Know Ahead of Cole Haan’s IPO
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Cole Haan is the latest brand to announce its plan to go public at a time when its continued push into the winning athleisure sector has helped drive double-digit growth in sales and profits.
Two months after confirming that it had begun preparing for an initial public offering, the American footwear label yesterday said that it had confidentially submitted its draft registration statement with the Securities and Exchange Commission, thus making official its move into the public arena.
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While the size of the offering and the timing have yet to be determined, the IPO is expected to commence after the SEC completes its review process.
Experts are bullish on Cole Haan’s potential as a publicly traded company, noting the shoemaker’s evolution from its classic New England dress styles to performance- and tech-driven footwear while approaching its 92nd year in business.
“Cole Haan has been at the forefront of innovation in the space while also remaining commercial,” explained Beth Goldstein, fashion footwear and accessories analyst at The NPD Group Inc. “Given the success and the growth the brand has had over the past few years, the timing of the filing is understandable as they look to raise funds to fund future expansion.”
The company has lately managed to find a sweet spot between fashion and technology with trend-driven styles that incorporate proprietary cushioning systems and lightweight outsoles. For the fiscal year ended June 1, Cole Haan’s revenues increased 14% to $687 million, while its adjusted earnings climbed 56% to $95.3 million.
However, the brand is stepping into the public market at a challenging time. Other fashion firms that have launched IPOs in the past year have had mixed results, including online luxury marketplace Farfetch and denim purveyor Levi Strauss. And some retail firms, such as Hudson’s Bay Co., are even opting to go private. The last major footwear IPOs were Crocs and Heelys — both in 2006.
Goldstein noted Cole Haan will be taking on substantial fiscal responsibilities as a public entity. “The downside would be if the pressures of having to report earnings to shareholders quarterly hinder [Cole Haan’s] innovation in any way,” she said.
In a similar vein, Susan Anderson, senior equity research analyst at B. Riley FBR, told FN, “There’s always the pressure to make or beat earnings, and sometimes that forces public companies to do things they wouldn’t do if they were private.”
Cole Haan’s IPO also comes during a period of uncertainty for the footwear industry at large, which is faced with new upcoming tariffs on Chinese imports, as well as broader retail-sector challenges evidenced by high-profile bankruptcies and widespread store closures.
The heritage brand, currently owned by private equity firm Apax Partners, has undergone significant changes since it was sold by Nike for $570 million in 2013. At the time, Cole Haan’s business was centered on dress shoes, but it has since shifted its focus to fashion-comfort and casual footwear lines as the athleisure trend has picked up momentum.
According to Moody’s Investors Service, athletic silhouettes represent nearly a fifth of Cole Haan’s footwear sales. Over the summer, the brand launched its comfort-focused Grand Ambition line, created in collaboration with the University of Massachusetts Amherst’s Biomechanics Laboratory. It also has a foot in the sneaker space and in January put a fresh spin on its popular Zerøgrand collection with its All-Day Trainer.
“People are looking for something new and differentiated versus the athletic shoes that they used to wear with everything,” Anderson said. “Consumers still want to be comfortable, and that’s not going to go away. The comfort and quality of [Cole Haan’s] sneakers is where they excel versus other brands.”
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