VINTAGE CLOTHING CLUB LTD, established for 4 years but in business for the last 3 years, is a fast-growing online retailer of vintage clothing, reworking clothing, vintage sweatshirts and designer accessories and rings.

After three years of hard work by its owner and his team, the business has now got real momentum. Based on the first four month’s trading figures for this FY, turnover is expected to jump 106% this year. Expansion has been achieved through growing sales and careful cash flow management with no external funding. Its pre-tax profit margin over the past 2 years has been 17% and the owner expects this to rise by the end of this FY.

Whereas most retailers and e-commerce stores selling vintage, pre-worn clothing use an intermediary to connect them with rag houses around the world, our client has a direct and established relationship with a major international supplier. For their re-work clothing, they have a garment factory producing items to his design. These connections allow our client to compete well on price while maintaining high-profit margins.

These supply connections however were not the sole reason we were keen to be the sell-side M&A advisor taking this company to market. The company has developed three important bespoke software suites delivering it an advantage of listing and pricing large quantities of items on popular marketplaces as well as stock management. This IP is in use and a new owner may wish to develop this software further with a view to leasing it to competitors for income.

This is a rare example of fast-growing joint e-commerce and bespoke technology play which we expect significant interest in as we take our client to market. We strongly urge you to express interest in this business without delay so we can affect a meeting between you and the owner.

Range of products for sale

Our client’s range span the following products (gross margins are shown in brackets):

• Vintage clothing – vintage (second-hand) T-shirts, polos, sweatshirts, hoodies, jumpers, fleeces, jackets, coats, trousers and accessories such as rings and necklaces to men and women (average sale price £33, average supply cost £5.50)
• Re-work clothing – Rework clothing involves adding custom styles and flourishes to existing garments to make them one-offs. This may involve combining a garment with a substantial part of another garment, adding fabric patches, introducing new rips, and adding embroidered designs (average sale price £140, average supply cost £33)
• Vintage sweatshirts – a wide variety of high-quality, used vintage sweatshirts many in the popular American college/university-style (average sale price £12-15, average supply cost 30-40p)
• Accessories and rings – sourced from China to suit the clothing offer above (average sale price £22.50, average supply cost £2.50)

Marketplaces and marketing

The company uses a Shopify WordPress platform on its e-commerce website. The website achieves the following figures:

• 10% Returning customer rate
• 34,000 store sessions a month (23,886 UK, 7,500 USA)
• 30,000 unique visitors a month
• 1% online conversion rate
• £64 average order value
• Visitor numbers up 246% year on year

The company’s website accounts for 70% of sales. The remainder of the sales come from four dedicated stores on two very popular fashion sales channels. Each store scores either 99% or 100% in customer ratings.

Their Instagram account has a following of over 26,000 and they run paid-for campaigns (including remarketing which achieve a 1,100% return on advertising spend). The company sends 5,000 emails a week to its customers which generates around £35,000 of turnover per year. Our client also has an app for iOS and Android devices. Push notices are seen by over 3,000 downloaders whenever sent.

Proprietary shop-tech

The company invested £30,000 in building and developing three proprietary software platforms to increase efficiency. The first allows for the uploading of inventory semi-automatically to third-party platforms. Automatic uploading is banned currently by many with users partaking in it at risk of having their accounts closed. The company found a successful workaround to this which has helped them become a top 5-20 store on both sites.

The second proprietary platform is a re-uploading function which populates the website, the 3rd party platforms and the app with prices with a 10% reduction. This prioritises their listings on 3rd party platforms. The third platform is stock checking software. Only recently finished, the ability to do this is essential for operating a significant varied inventory on multiple marketplaces.

Financial performance

T/O in the last financial year was £284,662 last FY T/O, up 59% from the previous year. Their 2yr average pre-tax net margin at 17%.

Enquiries

To find out more about our client’s business, please contact Swan Corporate in the first instance using the contact form below.