Teaser
Teaser XXXXX
XXXXX
XXXXX XXXXX XXXXX XXXXX XXXXX
Investment Opportunity
The global athleisure market (sports and athletic clothing and footwear worn as everyday fashion) has witnessed significant growth, owing to greater health awareness and increasing fitness activities by customers. Capitalizing on this trend, XXXXX and her partner XXXXX established XXXXX, a business involved in the design, manufacturing and merchandising of high fashion artinspired activewear across the globe. Since its inception the company has successfully achieved some significant business milestones and is now looking to position itself as a global brand, with the aim of leveraging its customer base and appeal from North America into several global markets. The company is looking to raise around $1 million (base scenario) to fund production, marketing, manpower expenses and working capital. Another scenario of a $3 million equity investment is also discussed in this teaser.
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Business Overview
XXXXX is a Limited Liability Company, based in Los Angeles, California, founded in the year 2015 by Canadian artist and competitive athlete XXXXX and her partner XXXXX, who are the joint owners of the company. The company has been involved in the design, manufacturing and merchandising of high fashion artinspired activewear across the globe. XXXXX sells its products through it’s website portal to wholesalers, retailers, and direct consumers. It will also sell through e-commerce sites and multi-line showrooms. All of it’s product manufacturing, inventory control, storage and shipping are currently outsourced to local Los Angeles suppliers. The brand’s outfits are exclusively designed to bridge the gap between functionality and stylishness to suit the contemporary trend of athleisure wear. The company targets the niche market of sports and fitness consumers, consisting of sports and fitness lovers and all those people leading a healthy and active lifestyle.
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The Management
XXXXX is the Founder, CEO and Chief Designer of XXXXX. She is the main creative force behind the brand and handles most of the day to day operations. XXXXX is a graduate of the prestigious SUNY Plattsburgh Fine Arts program in New York State and attended Carlton University to achieve her masters degree in Art History and Curatorial Museum Studies. Since 2007, she has enjoyed life as a successful artist with her signature show-stopping paintings, receiving critical acclaim worldwide. XXXXX was a professional soccer player and a highly regarded athlete; also a sought after Pastry Chef at Le Cordon Bleu. Following this training, she developed a passion for physical fitness and fashion. It was then she obtained her certification to become a personal trainer. She is a nationally ranked fitness competitor and model, competing across the United States.
XXXXX's entry into clothing began in late 2011, using quality blank garments as the canvas upon which unique and original art by XXXXX was screen printed. She began with printing her own artwork on t-shirts, hooded sweatshirts and tank tops for women and men. She eventually switched from her original products to a contemporary cross over active wear brand. 4
The Management XXXXX has been the brand manager and advisor at XXXXX since two years. An entrepreneurial creative leader with an expertise in Design Development and Brand Management, XXXXX is a Los Angeles born Native focused on every part of Design and Brand building process. XXXXX got an early start in her career when she began working with some of L.A's top celebrity Wardrobe Stylist on music videos and fashion editorials before moving to New York where she ultimately became a Stylist in her own right. In New York she worked with world renowned photographers, designers & the industry’s top super models before returning to Los Angeles where her career continued, styling and now designing wardrobe for musicians on tour, music videos, national campaigns and award winning commercials for over a decade. XXXXX's natural talent and design skills evolved into the next chapter of her career, designing contemporary clothing lines for Disney, Yogi, Henry Duarte, Jeff Rudes (J brand) and Betsey Johnson, before creating her own collection, Divine Wear which was a big hit in the lifestyle market.
XXXXX is passionately involved in every part of the design and brand building process! Now as a consultant her clients greatly benefit from her understanding of how the fashion industry works from design and marketing to overseeing production and sales in the contemporary, lifestyle and "athleisure" market. 5
Products and Features
Product Range • Leggings • Sports Bras • Tank Tops • Hoodies • Jackets • Pants • Shorts The products are designed with unique art work and from a comfortable fabric known as ‘Spandex’, that offers durability, flexibility and breathability and renders a flattering fit. Features • Contemporary, fashionable, activewear • Fun, attractive, fashion-forward design • Fully functional for active customers • Function-specific cutting-edge material • Easy to mix-and-match product design • Highly competitive product price points In the long run, the company will design products which will include a wide variety of basics and prints to differentiate the brand.
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Target Market Sports Participants This will consist of sporting participants from amateur to professional talents, from all categories of sports in the region. Whilst football is the most popular sport in the UAE, the sports sector includes people actively participating in various other sports including camel racing, endurance riding, cycling, falconry etc. Fitness Lovers A great spurt in the popularity of sports, weight management and athletics has been seen in the middle-age and elderly population over the years. A healthy lifestyle has become a priority for a number of people and in order to achieve this, they are engaging in physical exercise, thereby creating a huge demand for sportswear globally. General Public This segment consists of those people who prefer sportswear as casual clothing. This trend has been increasing in recent times. Apart from this, there are a number of government-led initiatives that are targeted at the general public to encourage healthier living, increased consumer awareness surrounding wellbeing and demand for services that ease the stresses of living in a fast-paced environment. Others This segment will consists of parents of young participants, league representatives, independent coaches, school athletics coaches and directors, sports performance businesses, training and fitness centers etc.
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Operations
The key functions of the company are: • Website Design, Development and Maintenance • Product Design • Production • Inventory/Warehouse Management • Distribution • Marketing • Sales • Bookkeeping The company has adopted an outsourcing strategy for much of its business. Currently, all major functions are outsourced to local third part suppliers. The company has tie-ups with manufacturing companies in Los Angeles, who procure required raw materials directly from the market and incorporates XXXXX designs into the completed clothing lines. The company uses kspluslc.com (KSP) for warehousing and fulfillment. KSP is connected to Shopify via XML. Orders come in and are then automatically fulfilled. Returns and order entry functions are currently being automated.
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SWOT Strengths • Exclusive access to original art work of the founder, XXXXX • Established and globally recognized brand • Established business model • Access to key markets through online presence • Established relationship with key partners • Knowledge and experience of the founder about the industry • Intellectual Property rights to the artwork and designs of the company
Weaknesses • Competition from well diversified and deep seated players in the market • Threat from other online retailers Opportunities • Increasing fabric prices • Not being able to meet production and delivery deadlines, which may affect relationships with customers. • Application of art work to competitor’s product designs, since this is the signature of the XXXXX brand. Threats • Changes in consumers’ tastes and preferences. • Increasing innovations in the market such as nanotechnology fabrics, compression fabrics, ultra thin insulation fabrics. • Economic downturns • Regulations • Unfavourable government policies
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Competitors
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Competitive Edge
• Original design, hand-crafted, art-inspired activewear is the company’s primary competitive advantage. • The company’s exclusive access to the unique, original art work of Canadian artist, competitive athlete and the founder and co-owner of the business, XXXXX.
• The ability to capitalize and integrate the art works into high fashion activewear. • Exceptional product design that combines strong functionality with stylishness. • Strong and expanding brand recognition. • The company’s total commitment to supporting its customers’ healthy and luxurious lifestyle selections. • The company’s reputation for quality clothing that stands up to the rigors of athletic use.
• The use of US manufacturing ensures that the company’s high product quality is maintained with a quick turnaround.
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The Market More global brands are combining "fashion and fitness" into their design as consumers increasingly adopt a "24/7" active look. This has driven key segments of sportswear to shift to casual wear. Athleisure is currently an explosive growth category in apparel. Rising health consciousness and changing fashion trends are expected to drive the athleisure market forward in the future. Changing lifestyles and consumer tastes have resulted in people opting for durable and comfortable clothing. This shift in trend is presumed to bolster the athleisure market, especially with US Millennials being the largest drivers of athleisure sales. Athleisure wear is particularly popular among women, since they are increasingly becoming fashion conscious and no longer satisfied by wearing sweatpants and loose shirts for fitness activities. They want to express a personal and unique sense of style and demand clothing that is comfortable, durable and versatile. According to research by Morgan Stanley, the athleisure sector has seen a huge increase of 42% over the last seven years, and is now worth over $270 bn globally – not only that, athleisure is also predicted to grow another 30% by 2020, especially in Asia and the US. According to the NPD Group, US activewear and apparel sales totalled $45.9 bn in 2016, up 11% from last year and far outperforming the traditional apparel sector overall.
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The Market
Athleisure continues to gain in popularity among consumers. This sector has been an increasingly important sub-sector of the sports apparel industry for the better part of the past decade. This has helped in the growth for both sportswear and apparel players. Although initially adopted for sports inspired garments, consumers are increasingly looking for performance enhanced products in their daily wear. The relaxation of dress codes over the past decade has played a huge role in the rise of athleisure. It has become socially acceptable to wear casual and in some cases, sportswear clothing to formal occasions or events such as weddings. Although dress code formalities have always fluctuated, the adoption of soft stretchy materials has never been so prevalent as it is today. The rise of fitness as a lifestyle choice will require clothing that facilitates a range of daily activities, yet adheres to the latest trends. Sportswear’s obsession with fashion is just getting started and this is its biggest opportunity yet.
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Strategies Business Strategy • Strategic Alliances with partners • Make available new trending items • Strong Initial Marketing • Customer Satisfaction • Getting Repeat Clients • Expansion of business Growth Strategy • Expand market share by creating and selling more lines • Having a core product on which the brand is based • Design new products based on the latest trends • Expand existing product lines by offering a wider range of products. • Reach out to new markets from different age groups • Penetrating new geographies. • Expand into foreign markets. • Cultivate strategic alliances with key partners Marketing Strategy • Website • SEO • Google Ads • Social Media • Email Newsletters • Distribution through boutiques and showroom • Brand Ambassadors • Hiring a publicist • Promotional Offers and Discounts • Attending trade shows • Liaising with fitness and sports clubs
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Financial Highlights Base Scenario Financial Summary $7,000,000
$6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0
Year 1
Year 2
Year 3
Year 4
Year 5
Revenue
3,150,000
3,828,000
4,562,160
5,447,035
6,514,703
Net Profit
163,660
200,226
271,211
326,576
392,812
1,163,660
1,363,886
1,635,097
1,961,673
2,354,485
Cash Balance Particulars
Amount in USD
Uses of Funds Marketing Payroll Initial Inventory Working Capital Total
302,000 335,000 313,000 50,000 1,000,000
Particulars Net Present Value (NPV) Internal Rate of Return (IRR) CAGR of Revenue CAGR of Profits CAGR of Cash Average Profits
Value $812,795 56% 20% 25% 19% 5.68%
Industry Benchmark Not Applicable Not Applicable 11% Not Applicable Not Applicable 4.60%
Sources of Funds Equity Total
1,000,000 1,000,000
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Financial Highlights $ 3 million Scenario Financial Summary $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0
Year 1
Year 2
Year 3
Year 4
Year 5
Revenue
6,000,000
6,433,597
8,218,626
9,190,929
10,251,220
Net Profit
425,250
673,575
840,986
1,001,836
1,173,315
3,425,250
4,098,825
4,939,811
5,941,647
7,114,962
Cash Balance Particulars
Amount in USD
Uses of Funds Marketing Payroll Inventory Working Capital Total
450,000 466,250 1,650,000 433,750 3,000,000
Particulars Net Present Value (NPV) Internal Rate of Return (IRR) CAGR of Revenue CAGR of Profits CAGR of Cash Average Profits
Value Industry Benchmark $2,468,351 Not Applicable 56% Not Applicable 14% 11% 20% Not Applicable 20% Not Applicable 10% 4.60%
Sources of Funds Equity Total
3,000,000 3,000,000
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