PEEKABOO GOES PUBLIC
Kids’ clothing firm grows
In the same week Vancouver women’s fashion retailer Aritzia raised $400 million in its initial public offering, another much smaller local clothing business entered the public arena.
Peekaboo Beans Inc., a Richmond direct sales childrenswear business, is going public through a reverse takeover of North Group Finance Limited, an investment and merchant banking firm.
“We’ve built the infrastructure of the direct sales business and invested in that, and now we’re positioned for growth,” Peekaboo Beans CEO and president Traci Costa said.
Peekaboo Beans raised just over $1 million in a private placement to expand its direct-sales network in Canada and fund its working capital cycle. Trading in Peekaboo’s shares on the TSX Venture Exchange is expected to begin on Wednesday, under the symbol PBB.
Peekaboo Beans generated $3.5 million in annual sales (unaudited) in fiscal 2015. It has 1,000 direct sales representatives and 20 employees. The company hopes to be profitable by fiscal 2017.
“We wanted to raise capital for expansion and allow ownership (by) our sales force,” Costa said. “This gives them the opportunity to be shareholders of the business that their hearts beat strong for already …
“Every one of my employees is a shareholder now.”
The timing for Peekaboo Beans and Aritzia going public is entirely coincidental, Costa said.
“I’ve been working this for about eight months, so the timing of it couldn’t have been planned,” she said. “Their retail model is completely different from our model. Our model is really creating these mobile boutiques.”
Nevertheless, the growing number of Vancouver apparel companies trading on public exchanges “speaks volumes for the great brands that are coming out of Vancouver,” Costa said, referring to Aritzia and Lululemon.
“Vancouver has developed into a global hub for innovative apparel and accessories design,” Peekaboo Beans director Darrell Kopke said, naming Lululemon, Aritzia, MEC, RYU, Herschel, Arc’teryx and Native Shoes.
“Although in the last 20 years, the amount of public companies has dropped, the amount of Vancouver-based apparel companies that IPO seems to contradict this,” said Kopke, a former Kit and Ace Designs CEO and an adjunct professor at UBC’s Sauder School of Business.
Costa started Peekaboo Beans as a wholesale children’s clothing manufacturer in 2006. In 2011, she moved to direct sales.
Costa’s 1,000 sales representatives are largely mothers who sign on for $199, hold house parties and make a 15 to 35 per cent commission on sales. They also make 10 per cent of sales generated by representatives they recruit.
Peekaboo Beans employs 20 people to handle marketing, design, production and logistics. Everything from sample development to pattern making and final production is outsourced to China.
“The direct sales model is a simple model,” Costa said. “Bring one person on the team and you can double overnight. It’s a lot more scalable and a lot easier, and there’s no cost to that growth.”