Friday, March 29

Koovs Seeks £23 Million for Indian Market Expansion

London-listed fashion e-commerce company, Koovs announced its plan to raise 22-23 million pounds this year in a bid to accelerate its growth plans and expand its presence in the Indian e-commerce market. This decision comes amidst dropping sales reports in the UK market. It also announced its willingness to raise 50 million pounds funding, as their cash reserves are not significant.

“We will need up to GBP 50 million to fund our acceleration plan. This will be done in tranches. This year, we are looking at about GBP 22-23 million, which we expect to, close in the new few months,” said Koovs Chairman, Waheed Alli.

Sales are a big matter of concern presently and the company could not hide its incertitude about the future. The company recently revealed H1 gross sales were flat at 7.9 million pounds while H2 sales would be on the decline, meaning sales are expected to drop from 18.6 million pounds to 14.5 million because of their “cash conservation plan”.

This will ultimately lead to a full-year loss on an Ebitda basis of 14.4 million pounds, which is, at least some positives, an increase on the 19.6 million pounds loss of last year. Fortunately, the company’s trading margin is also on an upward slope, increasing by 4% from last year to reach 11%.

The firm affirmed that more than 70 million pounds were invested in Koovs’ “journey to becoming India’s leading affordable fashion brand” and “the board actively continues the previously announced dialogue with potential new investors.” In November 2016, the e-commerce firm raised 10.9 million pounds from existing and new shareholders, among which 3.9 million pounds came from the Times of India Group.

The board is now “determined that a total of up to 50 million pounds of further investment will be required to fund the acceleration plan.” Additionally, “a significant part of this investment will be devoted to marketing and brand, where Koovs has clear evidence of a strong correlation between cash investment and sales achieved.”

However, as the firm is still actively looking to attract new investors in, the “board will continue to focus on cash preservation.” On March 1, the company had cash balances of 3.5 million pounds and the monthly spending forecast strikes at 0.75 million pounds per month. As a result, the firm fears running out of cash and this alarming situation will put future investors in the leading seat of negotiations.

A statement from Koovs announces, “the exact timing and amount of fundraisers will balance the board’s desire to provide short-term working capital and to invest quickly, in scale, to take advantage of the opportunities presented, with the obvious need to limit dilution of existing investors as much as possible.”

The Indian fashion e-commerce market is very competitive with giant players like Flipkart and Amazon owning most of the market shares. Myntra, Jabong, AJio among others are also fighting for their place in the market. However, Koovs idea of strengthening their hold of India’s fashion e-commerce market is not as desperate as one might suggest for few retailers offer quality western fashion and designer wear.

“We are extremely excited about the opportunity which lies ahead of us. Growth is already returning to India’s e-commerce market following the introduction of demonetization and the Goods and Services Tax, and we believe that the strong fundamentals underpinning the market’s long-term growth remain undeniable.” Said Mary Turner, Koovs’ Chief Executive Officer.

Moreover, a recent RedSeer survey revealed that Koovs “continues to outperform other platforms on product variety and quality”, backed by a large fan base made up of 2.4 million social media followers comprising of 1.9 million users on Facebook and half a million on Instagram. Koovs also delivers products faster than local rivals and sell their own label product, which is great to recover margins.