Dol­lar stores a path to global am­bi­tions for MAV

South Florida Sun-Sentinel (Sunday) - - Money - By Ste­fanie Marotta Bloomberg News

The dol­lar store isn’t typ­i­cally the first des­ti­na­tion shop­pers might think of for sa­lon-qual­ity sham­poo, but the bar­gain re­tail­ers are part of one Cana­dian com­pany’s global ex­pan­sion.

MAV Beauty Brands, the per­sonal-care com­pany founded by celebrity hair­styl­ist Marc An­thony Venere, be­gan sell­ing his name­sake Marc An­thony line in the sec­ond-big­gest U.S. dol­lar store chain in the sec­ond quar­ter just as the Con­cord, On­tario-based com­pany geared up for its $185.5 mil­lion ini­tial pub­lic of­fer­ing in July.

The IPO was the cul­mi­na­tion of three decades in the beauty busi­ness for Venere, 49, who started cut­ting hair in his fam­ily’s sa­lon in North York, On­tario, and in­cluded stints as a stylist to such stars as Eva Lon­go­ria. MAV added the mil­len­ni­al­fo­cused Cake and plant­based Ren­pure lines with ac­qui­si­tions ear­lier this year.

Ven­erre was 18 and com­pet­ing in the world hair­dress­ing cham­pi­onships in Ger­many when he re­al­ized he wanted to do more than run a sa­lon. “I was watch­ing th­ese beau­ti­ful mod­els walk­ing down the run­way and all I re­mem­ber think­ing is that one day I want to build a global com­pany,” he said in an in­ter­view at Bloomberg’s Toronto of­fice.

The dol­lar-store push gives MAV ex­po­sure to a large, di­verse pop­u­la­tion where the re­tail­ers have be­come a beauty des­ti­na­tion, ac­cord­ing to Chief Rev­enue Of­fi­cer Tim Bunch.

“They re­ally do serve a great pop­u­la­tion of the con­sumer in the U.S.,” said Bunch, who grew up in a small farm­ing town in Mis­souri where there was only one mass re­tailer but mul­ti­ple dol­lar stores. Dol­lar Tree Inc., which in­cludes more than 8,000 Fam­ily Dol­lar out­lets, is the sec­ond-largest dol­lar store chain in the U.S.

With prod­ucts in more than 25 coun­tries and the ad­di­tion of Cake and Ren­pure, Venere is fo­cused on or­ganic growth and cross sell­ing in the short term, rather than fur­ther ac­qui­si­tions. Of its 47 U.S. re­tail­ers,

36 carry just one of MAV’s three brands — an ex­pan­sion op­por­tu­nity that could add $27.8 mil­lion in sales in the next three years, ac­cord­ing to Canac­cord Ge­nu­ity an­a­lyst Camilo Lyon.

If MAV were to in­crease the dis­tri­bu­tion of all three of its brands, the bot­tom­line im­pact would “far ex­ceed our guid­ance,” Venere said. He thinks the time is right as con­sumers grav­i­tate to­ward in­de­pen­dent brands and “masstige” prod­ucts -those with an up­scale ap­peal at lower costs.

Lyon has price tar­get of

$17.01 for MAV, one of five buys from an­a­lysts who ini­ti­ated cov­er­age af­ter the IPO. The com­pany posted a net loss of $2.3 mil­lion for the sec­ond quar­ter on rev­enue of $17.7 mil­lion. Sales were up 148 per­cent from a year ear­lier, with a 34 per­cent boost from or­ganic

growth.

MAV is try­ing to main­tain the in­de­pen­dent, en­trepreneurial cul­ture of the com­pa­nies it ac­quires to de­velop prod­ucts that fol­low the street trends. Venere said he can get his prod­ucts to mar­ket in as lit­tle as three to six months com­pared with the two to three-year

time­line of big­ger brands, he said.

Con­sumer goods com­pa­nies are hot on the trail of the in­de­pen­dent brand trend though. Last year, Lon­don-based Unilever ac­quired SheaMois­ture’s par­ent com­pany Sundial Brands. With large plat­form com­pa­nies over­see­ing mul­ti­ple

brands at once, they tend to slow in­no­va­tion, Venere said.

“In­no­va­tion is the lifeblood of our com­pany,” Venere said, ad­ding that nat­u­ral prod­ucts are a trend that’s only get­ting big­ger and tak­ing over the beauty in­dus­try.

JACKIE DIVES/BLOOMBERG

Marc An­thony Venere, chief ex­ec­u­tive of MAV Beauty Brands who is us­ing bar­gain re­tail­ers to ex­pand.

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