It’s a nice thing when a company lands on the Venture with actual seven-figure sales and a network of 1000 sales reps, rather than a roped off bit of cow pasture that someone flew over in a helicopter.
So here’s a cheer for Peekaboo Beans (NOR.V), a Canadian children’s apparel company that has been around since 2006 and, through the direct sales efforts of 1000 independent sales reps, managed to top $3m in revenues in the last year.
That, with $2.5m to be raised as it goes public, puts the play wear designer/distributor well ahead of some names in the sector that have gone public before them.
You’ve heard me talk of RYU (RYU.V), the fitness wear line that busted a couple of times over several years before the Leone family took over last year with a view to taking down the big boys. They’ve had a slow start, but their flagship retail store is now open and product is moving. Not moving quick enough for a lot of potential investors, or to pay back what’s been put into it, but the road is long in retail.
Then there’s Mezzi (MZI.V), Keir Reynolds’ fashion accessory aggregator, which bounces around in stock price so much I just can’t even put reason to it anymore.
Peekaboo Beans is coming in over the top of those two, because there’s an actual business there from the outset, rather than one being planned. The company will be selling into their opening financing at $1.05 a share, with a $1.50 warrant, which is a damn sight higher than the $0.055 North Group Financial shares that it’s rolling into. A 3-for-1 rollback will also take place, leaving the company with just 900k shares pre-financing, and around 7m after the fact. That’s tight.
Also tight: The company has a reputation. It’s the largest direct-sales retailer of children’s apparel in Canada, and the direct sales model allows them not to sink a fortune into inventory ahead of sales, to outsource manufacture as needed, and with a hefty slice of an industry you can never discount – moms buying things for their kids.
As a father, I know how big a business kids apparel is, but it’s perfect for direct sales, as friends hold parties to sell to their friends, and word of mouth can be shared quickly and widely – and inexpensively.
Added to the quality of this deal is the fact that the founder, President and CEO, Traci Costa, has a background in financial services, so the taxes will be done on time and nobody’s going to be using this as a lifestyle business. Alongside her is a former CEO of Kit and Ace and GM of Lululemon, an owner of several Lululemon franchise stores. and, just for social responsibility chops, a founder of Endurance Wind Power.
And if that’s not enough feel good, they also build kids’ playgrounds on the side.
The big question, however, as always, is ‘will the stock go up?’
That’s a tough one. The post-listing post-financing market cap is pegged around $7m, by my figuring, which is totally fair on the back of $3.5m in 2015 sales (unaudited) and $2.5m added to the bank in the financing (assuming it’s fully subscribed).
Is the company making a profit? That I can’t tell you, but if it was, I’d imagine if would be talked about more than it is currently. I also don’t know if there’s a growth strategy beyond staying the current course – is there potential to bust into the US? An online sales push? All of that is, for now, a mystery.
But I know of a few people who aren’t traditional private placement investors who are first-timing it here because they either sell the stuff for a living, or buy a lot of it. If 1 in 20 people in their sales network tosses in $5k each, that’s $250k in long term money, before you even get into the usual crowd of Vancouver stock choads.
It’s not an absurd valuation, I’ll say that, and there’s enough to like about it that I’ll be putting it on my watchlist and seeing how those first few news pieces evolve.
If you want in, details here.
FULL DISCLOSURE: I have no commercial involvement in this company, nor do I presently own stock. But we’ll see.Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.