The wave of IPOs hitting Wall Street is bringing some new — and acquisitive — names to the fore and into the rough and tumble.
Witness the Jill Ramsey-led A.k.a. Brands, which staged its initial public offering on Wednesday, raising some $110 million by selling 10 million shares at $11 each, with a good deal of the funds earmarked for debt repayment.
After fears surrounding the Chinese real estate debts rattled markets earlier in the week, Wall Street was bouncing back on Wednesday. But investors still took a cautious stance toward the newcomer. Shares of A.k.a. fell 9.2 percent to $9.99 on their first day trading.
That still left A.k.a. with a market capitalization of $1.3 billion and a turn in the spotlight, which can be especially glaring on Wall Street.
While many of the companies coming to market are the oft-sited digital darlings such as Warby Parker and Allbirds, A.k.a. is playing into many of the same direct-to-consumer and young consumer trends in the market, but with a different spin on the business model.
Ramsey — a digital retail veteran whose background includes stints at Walmart, eBay and Macy’s and is chief executive officer of A.k.a. — is looking to buy brands that have proven they can connect with consumers and then help them grow with a little business savvy.
It’s an approach that’s been used before in the private equity world, but A.k.a. is something of a breakout having now gone public with a 10-figure valuation, giving it a platform and more resources and a higher profile to wheel and deal.
Ramsey took the helm of the Summit Partners-backed company just after the pandemic started and hit the ground running despite all the consumer disruption. She changed the name of the firm to A.k.a. from Excelerate Brands. And the portfolio, which already included Princess Polly, Petal & Pup and Rebdolls, started to grow this year with the addition of streetwear company Culture Kings. (Prince Polly, Petal & Pup and Culture Kings are all based in Australia, while plus-size specialist Rebdolls is headquartered in New Jersey).
The brands are all relatively young — Culture Kings is the oldest, founded in 2008 — and good at drawing attention online.
In an interview with WWD, Ramsey described the brands — both in the company’s portfolio and on its acquisition radar — as forward leaning with passionate founders who are expert at telling their stories online.
They’re also used to moving quickly and very close to the market.
“They’re buying in what I would call a very next generation way, smarter, faster buying,” she said. “They’re buying on a test and repeat model, tiny test buys, see what the customers like and chase back into the good items. We really get trends to the customer fast.”
All together, the company’s brands drove A.k.a.’s pro-forma sales up 76 percent to $385 million last year, with 80 percent of those sales at full price and returns a relatively low 11 percent. Pro-forma profits tallied $13.8 million.
While A.k.a.’s brands operate independently, but have access to a common platform.
“This model balances scale-enabled cost savings with operational flexibility, facilitates low-risk innovation and accommodates the needs of our brands at various stages of growth,” the company said in its registration statement for the offering.
Key to this is an asset-light philosophy that makes use of third-party platforms across sourcing, distribution, technology and other back-office functions.
As new brands come on board, A.k.a. can use its scale to get a better deal from the Shopifys of the world and improve the businesses margins.
It’s a plug and play approach that will have Ramsey and her team scouting for new names to bring on board.
Ramsey said she’s on the hunt for brands globally and that there was “a lot of growth ahead,” making clear that she’s not obsessing over the first-day stock drop.
“We’re just so excited to be listed,” she said. “It’s an incredible opportunity of being a public company and being able to attract more great brands.”
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