Trainers and clothing retailer Footasylum has linked the cost of its borrowing to sustainability performance as part of a £35 million Revolving Credit Facility (RCF) secured from HSBC.
The retailer, which was acquired by investor Aurelius in August 2022 and is on a growth drive featuring store openings and the development of its omnichannel proposition, plans to use the RCF funding to continue its store expansion programme. That strategy began with the opening of a shop in Aberdeen in September, with Warrington and Doncaster stores coming this month.
Two further openings – in Rotherham and Wrexham – are expected later this year, while the company’s Merry Hill store will be trebled in size.
The HSBC RCF funding package includes a Sustainability Improvement Loan (SIL), which links the cost of borrowing to Footasylum’s sustainability performance, monitored by environmental compliance organisation Ecovadis and using its ESG ratings.
The Ecovadis rating will be tested on an annual basis to track Footasylum’s ESG performance. If the company improves its sustainability rating in line with pre-agreed targets, it could benefit from reduced interest rates on the loan.
In terms of its sustainability performance and plans already in place, Footasylum has committed to achieve a carbon net zero target for scope 1 and 2 emissions by 2030 and Scope 3 by 2040. The retailer said it began offsetting its carbon emissions in 2020 and – for example – plans to have a fully electric or hybrid fleet by 2025, with 70% of logistics journeys already powered by biodiesel.
Elsewhere, Footasylum already works with Make it Wild as part of an environmental tree planting partnership. Environmental change in the footwear industry from a materials perspective is notoriously difficult, though – and shoes having been described by recycling tech company Cetia in the past as the “poor relation of recycling”, which suggests some challenges ahead for Footasylum.
Other focus areas
The store expansion plans are initially estimated to create over 100 new jobs across the UK, while the additional financial support will also help the business to explore international acquisition opportunities.
In addition, the RCF will give Footasylum a chance to enhance its technology capabilities, as it aims to continue to develop its mobile-first digital offering and elevate its key exclusive brands, including Zavetti Canada, Alessandro Zavetti, and Monterrain. The use of influencers in its marketing strategy is also expected to continue, supported by the new funding.
Nick Scott, chief financial officer at Footasylum, commented: “This funding from HSBC UK is a key milestone in our growth journey and will help us achieve our ambitious environmental policy.
“It will enable us to not only expand our footprint in key locations across the UK but also accelerate our omnichannel technology investments, continue to grow Footasylum’s highly popular exclusive brands, and incubate the influencer talent that underpins our unique and highly successful marketing strategy.”
Zubayr Atcha, global relationship director for corporate banking at HSBC UK, remarked: “This funding will provide the flexibility needed to drive expansion plans, support their sustainability strategy, and further establish the retailer’s presence in the fast-growing street and sportswear market.
“Footasylum is a dynamic force in the consumer space, and we’re thrilled to be a part of their continued success and sustainability journey.”
Tobias Klaiber, managing director at Aurelius’s operations advisory team, added: “The HSBC SIL will enable Footasylum to further drive its ESG initiatives, and reflects its commitment to be an accountable sustainability leader.”
Footasylum revenue in the year to 27 January 2024 totalled £319.5 million, up from £298 million in the previous financial year. During the period, Footasylum’s profit before tax rose 112%.
[image credit: Footasylum]
