- Country: South Africa
- Industry: Textile, Apparel, Accessories
- Stage: Expansion/Growth
- Years in operations: 3, Employees: 1
- Investment size: $100,000 / min. $65,000
- Type of investment: Debt, Equity
Treasure Chest bras are manufactured in South Africa (Cape Town) with bras to fit sizes 34D to 42J. Funding is required to produce additional units of some lines in sizes that were sold out and also to replenish an entire line that was sold out due to the high demand.
The Company (also known as TC) is wholly owned by the sisters S. S. and K. P. and was recently acquired by them from the original founder. The loss-making company was bought in November 2011 for a deferred consideration of the existing stock plus the brand (registered trademark) & proprietary design developments (IP not patented) plus certain fixtures, fittings and shareholders loans. In addition, TC has a tax asset relating to previous trading losses. The acquisition was funded through a loan committed by a family friend who has subsequently had to divert funds previously earmarked for TC to their other ventures hence creating an investment opportunity sooner than anticipated.
TC bras are manufactured in South Africa (Cape Town) with bras to fit sizes 34D-42J and include matching panties and thongs. TC has focused on sourcing local fittings and manufacturers, and prides itself in contributing towards the economy of the country. Top quality fabrics and embroidery are sourced from abroad and imported.
TC currently supplies to 6 Boutiques and 12 Distributors nationally and internationally (Nigeria, USA). The national spread is predominantly from Middle to North South Africa – with the potential to grow rapidly into currently underserviced areas with stock supply and aggressive marketing.
Distributors purchase Sales Kits (currently 3 tiered) and stock up as and when required. Boutiques place an opening order for minimum quantities and thereafter order as required. The key to winning and retaining a TC client is for them to be correctly fitted into the product.
There was originally a range of 12 styles with a size range of 50 different sizes per style. However, this has proven excessively complicated and expensive from a raw material, production & working capital perspective to manage. Respectively, the range has been refined to fewer than 5 designs based on best-selling colour, design & styles (including a sports bra).
3 or 4 product range extension opportunities exist, namely swimwear, maternity wear, mastectomy bras and bedroom floor wear. The focus initially is on maximising sales on the existing (reduced) range.
The goal is to become purely the manufacturer of the product with enough distribution outlets nationally to service the client base.
TC has a design and factory agent managing the quality control on the factory assembly line. Every new style gets fitted onto TC's own models, and a very strict wearer trial is put in place to ensure that quality and fit is maintained. Each bra size, regardless of the style in the range should fit the wearer the same – this is one of the main criticisms of Chinese manufactured competitive products. There is a lead time per production run of approximately 10-12 weeks.
Currently (without securing a chain store deal) the 5 year growth trajectory shows the potential for TC to become rapidly profitable due to the strong GP (45%) and high operational gearing. Breakeven sales volume is [2,666]bras per annum based on current levels of OpEx of R420,000 pa whilst at 6,000 units per annum operating profit rises to [R315,000.]
TC is ideally placed with a capital injection to build on the last 6 months with rapid growth pushing volumes and profit up exponentially.
TC bras are manufactured in South Africa (Cape Town) with bras to fit sizes 34D-42J & include matching panties & thongs. TC has focused on sourcing local fittings & manufacturers & prides itself in contributing towards the economy of the country. TC has a local design & factory agent managing the quality control on the factory assembly line. Every new style gets fitted onto TC's own models & a very strict wearer trial is put in place to ensure quality & fit is maintained. Each bra size, regardless of the style in the range should fit the wearer the same – this is one of the main criticisms of Chinese manufactured competitive products.
Rationale for the deal
Turnover R216,000, gross profit of R95,000 and OpEx of R145,000 with a small net loss of R50,000.
The business is currently under trading due to stock outages and in analysis of a 10 week order period was only able to supply 56% of orders placed, losing R67k of potential revenue and R37k of GP. This would have easily brought TC to a potential breakeven position within the first 6 months of trading.
From the last 6 months it is clear that the projected GP of 45% is achievable and the current pressure on OpEx again shows that the next 12-month projected monthly figure of R35,000 against actual 6 month average of R24,000 (increase to include urgent marketing spend) is also highly achievable. Treasure Chest is ideally placed with a capital injection to build on the last 6 months with rapid growth pushing volumes and profit up exponentially.
Use of financing
Funding is required for:
* PR campaign to include launch press release, media giveaways, ignite sampling, social media platforms (quote R17500);
* Website continued upgrade (R5000);
* Existing debt commitments (including a raw materials order placed) (R65000);
* Production: product fittings - product sign off - order confirmation - purchase;
* Pre-production sales drive;
* Fulfilment of existing client orders (currently delivering circa 40% - 50%);
* Win back of retailers lost due to stock issues;
* Post-production marketing drive for new production line;
* New production line – release Feb 2013.
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