Online fashion company aka Brands sets terms for IPO

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Direct-to-consumer fashion company aka Brands is offering investors its Millennials and Gen Z-focused apparel business, setting terms for its initial public offering (IPO) on Monday.

The San Francisco, Calif.-Based company is seeking to raise some $ 263.9 million by selling 13.89 million shares at an expected price of $ 17-19 per share and an alleged price of $ 18. That would value the company up to $ 2.46 billion.

The shares are expected to be listed on the New York Stock Exchange under the symbol “AKA”. BofA Securities, Credit Suisse and Jefferies are the main underwriters of the transaction.

Pay off the debt

The company plans to use the proceeds of the IPO, along with borrowings under a new $ 98.8 million senior secured facility, to repay an existing $ 143.5 million credit facility. million dollars and $ 27.5 million in subordinated notes.

It will also buy minority stakes in Petal + Pup, which will become a wholly-owned subsidiary.

The remaining amounts will be used for working capital and general corporate purposes.

Cash at June 30 was $ 34.3 million.

Building brands

Aka Brands, which was formed in 2018, intends to target distinct consumer categories of young shoppers through its acquisitions of digital-native fashion brands.

Most recently, in March, AKA acquired Australian streetwear company Culture Kings, adding to its brand portfolio that includes Princess Polly, Petal + Pup and Rebdolls.

The company provides a suite of third-party resources to help each brand create their unique website and online store while helping with logistics.

Growing sales

AKA revenue increased 167% year-on-year for the six-month period ended June 30, with pro forma net revenue of $ 269.2 million, according to the SEC filing . In addition, in 2020 orders increased by 53%, with the average order size increasing by 14% compared to 2019 figures.

Adjusted EBITDA was multiplied by 3.5 and Adjusted EBITDA margin increased by 273 basis points in the first half of 2021 compared to the previous year.

The company points out that retail sales moved quickly online amid the pandemic, as foot traffic in malls and department stores quickly evaporated. Department store locations in the United States declined 30% to 6,000 in 2020 from 8,600 in 2011, according to IBISWorld market research.

The global online clothing, footwear and accessories market was valued at around $ 300 billion in 2019 and is expected to reach $ 546 billion by 2025, representing a compound annual growth rate of 10.5%, according to the market research company Euromonitor.

Young American consumers

Growth is expected to be even greater in the United States, where aka generated 58% of its revenue last year.

In the United States, online spending was $ 94 billion in 2019 and is expected to reach $ 192 billion by 2025, a CAGR of 12.7%. Euromonitor expects online penetration to reach around 50% in the U.S. apparel, footwear and accessories industry by 2025.

Millennials and Gen Z consumers than the target company are also more digital savvy and follow social media influencers who help sell and market products.

“As consumers turned to online shopping platforms and social media increasingly captured consumers’ time, a new generation of brands began to establish direct relationships with their customers through their own websites. branded e-commerce, a limited number of owned stores and social media platforms, ”alias noted in its filing with the SEC.

“These direct channels allow brands to interact directly with consumers and create unique brand identities to attract specific target demographics. These factors, combined with Millennials and Gen Z consumers seeking unique and emotionally connected brands, have created a fragmented landscape of digital and direct-to-consumer brands, ”the file added.

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