25. March 2021 | 08:44 CET
Steinhoff, RYU Apparel, Alibaba - The disruption is done!
Digital shopping has overtaken brick-and-mortar retail. If the change was already apparent before the Corona pandemic outbreak, the ever-extended lockdowns are equivalent to a death blow for retailers. Innovative brands rely on a multi-channel strategy and engage consumers with apps and services around the respective topics. This hides the previous unique selling point of stationary retail - direct customer contact including advisory services.
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ISIN: NL0011375019 , CA74979J4072 , US01609W1027
Train, Run, Live
A market volume of USD 208 billion is forecast for the sporting goods market in 2025, with annual growth rates of between 5 and 10%. The Internet as a sales channel is becoming increasingly important for the industry. For example, Nike's online sales increased by 60% in the full year 2020. In contrast, brick-and-mortar retail slumped dramatically, partly due to the closure of several stores due to the lockdowns. Adjusting growth strategies to digital must now happen quickly. The award-winning urban lifestyle brand RYU Apparel is consistently continuing the path it took last year. It invested in the development of its online stores, the development of new innovative products, and promising cooperations, which can be consistently used for the further strategy of building a digital ecosystem around the brand.
Experienced team with a clear goal
A long-term cooperation was signed with the Canadian national skateboarding team last year. As a supplier, RYU will thus be represented at the Olympic Games taking place this summer. Other partners of the team include global brands such as 7-Eleven, Red Bull and Swatch. Through a partnership with Branded Entertainment, product placements will be incorporated into the new television series "The Count." In addition, a North American campaign for Generation Active is planned with Zoom Media, which can reach 35 million fitness members across Canada and the United States. With these targets in place, new COO Rob Blair launched to achieve the mission of generating CAD 100 million in revenue per year by 2025 at the latest. Blair, who has worked with global players such as Nike, Red Bull, Lululemon and GapBody, is expected to take responsibility for the Company's design, merchandising and brand strategy.
Vision in view
CEO Cesare Fazari has a vision to build the leading urban apparel brand and wants to be mentioned in the same breath as top brands like Lululemon, Roots and Canada Goose. With the reopening of its flagship stores, expansion into Europe and the United Kingdom, and supply chain optimization, the next goals are in place. That this incredible speed requires capital should come as no surprise. For this reason, the urban sportswear manufacturer is planning a non-brokered private placement of secured convertible notes bearing interest at 7% per annum for total gross proceeds of up to USD 10 million. The Company is currently well on its way to sustainably scaling the business model. The management and vision experience could propel RYU to become a major player in the urban sportswear market in the long run. Currently, the stock market value is EUR 14.25 million. Should the private placement be subscribed by investors, the cash cushion would offer significant growth opportunities.
A drop in the ocean
Balance sheet manipulations worth billions of euros pave the way for the German-South African Steinhoff Group. Now the manager's liability insurance is paying out a small, but not despicable, amount of EUR 78 million. The sum relates to Company founder Bruno Steinhoff and former supervisory board chairman Christo Wiese. With D&O insurance, companies protect their managers from the financial consequences of misconduct. However, this does not apply in the case of negligence. That is why former CEO Markus Jooste, former CFO Ben la Grange and former European CEO Siegmar Schmidt have not been included. Steinhoff is still struggling with 90 lawsuits from South Africa, the Netherlands and Germany, with a total claim amount of EUR 7.7 billion. The agreement with the D&O insurance company is, therefore, more than convenient for the ailing Company. According to the Company's leaders, the aggrieved shareholders' target amount should be less than EUR 1 billion.
Opportunity to enter?
Alibaba, the Chinese e-commerce giant, has been under pressure for months. While the S&P 500 and other indexes are trading near their all-time highs, the Company's shares are still down about 25% from their highs reached about 5 months ago. Currently, the stock is cheaply valued by industry standards and trades below 20 times projected earnings per share. The technical picture has brightened considerably, and the Company's uncertainty should be more than priced in by now. As a result, the chart tested the uptrend established since 2010 several times. If successfully tested, the 200-day line is currently just under EUR 260.