TORONTO — As Canadian shoppers migrate online in soaring numbers, Roger Hardy — a Vancouver-based entrepreneur and venture capitalist — is taking a new online shoe company public in 2015 to tap into investor demand.
The company, which will be called Shoes.com Technologies Ltd., represents a consolidation of three online retailers acquired in 2014 by the Canadian merchant bank Hardy Capital Corp. They include Seattle’s Online.Shoes.com, which boasts revenues of $140 million; St. Louis’ Shoes.com, with revenues of $60 million, and SHOEme.ca, one of the fastest-growing e-commerce outlets targeting Canadian consumers.
This fusion of footwear businesses will serve all of North America and do so with a projected growth rate of 30 percent over the next five years, Hardy said.
The company is also expected to make “$350 million gross, $250 million net in 2015,” its president and chief executive officer added, with sales in the U.S. contributing about 85 percent to those figures.
“I saw an opportunity in Canada that was hard to ignore,” said Hardy, who in 2014 sold Coastal Contacts Inc., a digital retailer of contact lenses and eyeglasses listed on the Nasdaq and Toronto Stock Exchange, to Essilor International for an estimated 430 million Canadian dollars, or $355.5 million at current exchange.
“The fact is, Canadians are catching up with American consumers. We’re trying to stay ahead of that trend,” said Hardy.
“Canadians are getting more comfortable going online to shop. But Canadian business haven’t developed these footwear channels to take advantage of this migration to online purchases,” he explained.
According to current statistics, less than one percent of Canadians make their shoe purchases online, compared with 10 percent in the U.S. That gap has largely been attributed to the lack of maturity in Canada’s online retail market. Yet that very difference has turned Canada into the fastest-growing region for Hardy’s new venture, which will serve 2 million consumers in 2015.
“Right now we’re trying to direct a new business that was built quickly. We are only halfway there,” said Hardy. “We aren’t a high-fashion outlet and we don’t try to be all things to all people. What we’re trying to do is bring convenience, savings and an elevated shopping experience to underserved segments in Canada, and offer them high-quality brands that reflect today’s trend toward more casual, ath-leisure wear.”
Hardy’s company currently carries 500 shoe brands, including such labels as Clarks, Rockport, Baffin, Frye, Miz Mooz, Pika, Pikolinos, Toms and Teva. Though these numbers could easily be increased, Hardy remains selective, choosing only to collaborate with brands that have a strong track record in customer service. “Today lots of online companies have a high return rate on footwear orders. But returning 30 percent of our product isn’t what we signed up for. That’s not a success,” said Hardy. “That’s why we carefully curate collections 24/7 for our customers so that every purchase they make really fits their lifestyle.”
Hardy’s mission, however, doesn’t end there.
Though his initial interest in this venture was “in financial statements and the bottom line,” Hardy was surprised to discover his own passion for shoes and see it flourish. “I must have 100 pairs in my closet and I’ve only been at this business for a year. I’m definitely building my own shoe shopping momentum.”
That burgeoning enthusiasm bolstered Hardy’s determination to expose Canadians to brands they had never before seen.
“As an entrepreneur, disruption means innovation,” said Hardy.
Today, the footwear category in North America is estimated at more than $50 billion.
Though some industry analysts have predicted a tough climate for initial public offerings in 2015, particularly as brick-and-mortar companies push online and equity markets see more volatility, Hardy remains confident.
“Going public isn’t going to happen tomorrow. But we see it as being entirely possible this year,” said Hardy, the current chairman of Hardy Capital. “We’ve seen nothing but interest in this new venture. A lot of that has to do with the fact that the businesses we purchased have had a solid return for more than 15 years. Also, our management team is one I have worked with in the past. They’ve had a great return on capital investment.”