More and more North Americans are ditching big box stores and changing the way they shop. The days of piling the kids into the car to ‘head to the mall’ are collectively over as today’s parents simply lack the time… Saving is cool, and one commodity people cherish more than anything is time.
Another draw away from traditional retail shopping at malls is that it is not ‘unique’ to buy clothes from the ‘same old retailers.’ Whether parents are shopping for themselves or their children, they often want unique outfits (or at least they perceive them as unique) that show off their fashion prowess and personal taste.
Aside from soaring online sales, enabled through mediums such as Ottawa-based Shopify and led by global behemoths Amazon and Alibaba, another beneficiary of this trend away from the malls and big box stores is direct sales.
The Art of Direct Sales
The art of direct sales involves selling products directly to the consumer in a non-retail environment. Numerous studies show, when friends or colleagues have already vetted the brand or merchandise, consumers are far more likely to buy. Nielsen reported,
“84% of consumers say they either completely or somewhat trust recommendations from family, colleagues, and friends about products and services – making these recommendations the highest ranked source for trustworthiness…”
Furthermore, 74% of consumers identify word-of-mouth as a key influencer in their purchasing decision, according to a study by Ogilvy, Google and TNS.
Direct sales taps into this human behaviour, aided immeasurably by social media and the internet. So, before the direct sales phenomenon (or perhaps you could say the first crude version of it), if everyone knew Jane made cool bracelets, a few friends and family in the community might buy some and that would be it. Now, with social media’s global reach, Jane’s hypothetical bracelets can gain traction in cities across the country or even the world. Direct sales depends on a strong, connected sales team that believes passionately in their product…
Stella & Dot | A Direct Sales Leader
Several years ago, around 2008, The New York Times, InStyle and Lucky began to cover Stella & Dot‘s ingenuity and rise to success. The jewelry designer and sales company had created over 1,000 flexible careers for women across the US and Canada. Sales, in 2008, reached $3.8 million…
Roughly two years later, sales exceeded $100 million. Behind these sales, and the growth of the company, is Stella & Dot’s stylist force (sales team) which earned a reported $50 million in commissions.
Approximately two years after that, Stella & Dot would expand to the UK and Germany, doubling sales again to $200 million.
By 2016, Stella & Dot brands were bringing in more than $300 million in annual revenue, with over 50,000 sellers across six countries. What’s more, Stella & Dot are not the only direct sales company in jewelry paying out millions in commission. Chloe + Isabel and Origami Owl have also performed very well in recent years.
A particular type of investor, as well as aspiring part-time entrepreneurs seeking flexibility may be interested in the next direct sales opportunity. We have found one… it recently expanded its efforts from Canada into the mammoth market of the United States. And it is a public company trading on the TSX Venture…
Enter Peekaboo Beans (BEAN:TSXV) and its Sales Growth
Certainly, when reviewing direct sales companies, we want to see not just aggressive sales forecasts, but measurable revenue and profit growth as well. For Peekaboo Beans (BEAN: TSXV), a client and sponsor of this website, the last few years have shown just that.
On August 31st, Peekaboo Beans Reports “Strong Third Quarter 2017 Financial Results…”
Traci Costa, Peekaboo Beans Chief Executive Officer stated in that press release,
“We continued to see strong momentum across our business during the third quarter, with a 20% increase in sales, compared to the same period last year.”
“We are setting the stage for a strong launch into USA this Fall, coming off our strongest sales quarter ever.”
While sales are always key, to grow as a relatively new direct sales company, margins often need to improve. This is particularly important for younger companies because increasing margins can lead to higher commissions and ultimately more sales. Peekaboo Beans reported on August 31st that:
“This combined with a significant gross margin improvement, from 11% to 22% during the same period last year, gives us a strong foundation to build on.”
“Over the past three months, Peekaboo Beans realized an 80% growth in their Stylist network, over the same period last year.” Peekaboo Beans CEO and Founder, Traci Costa stated, “This can be attributed to a strong focus on training, to support our Stylists in building their sales teams and growing their independent businesses.”
Millennials Driving Direct Sales Market
Millennials in the U.S. and Canada are paramount to Peekaboo Beans’ future growth potential. This demographic currently makes up 35% of the workforce, but will make up 75% before long. They are well educated, but earn 20% less than their parents did at the same age (adjusted for inflation), according to USA Today. With living expenses rising, and often heavily burdened by student loan debt, millennials are seeking out ways to make flexible, extra income. They also have an affinity for quality/premium goods and services.
Like in any business, the ‘masses’ often do not notice until the company has ‘made it,’ and has gone rather mainstream. However, mainstream, direct sales companies almost all started small. Using a leading example mentioned earlier, Stella & Dot’s revenue crept higher in the first few years, before ultimately going parabolic. In recent years, Peekaboo Beans has shown rather steady gains from a sales and ‘Stylist’ standpoint.
Note: Peekaboo Beans had $328,209 in sales in 2009, compared with $3,469,867 in 2015. What’s more, the company recently announced it was launching its US expansion plan.
Although past sales/revenue growth may not be indicative of future results, an approximate 1,000% increase in sales in six years demonstrates a solid track record for Peekaboo. Something about how this direct sales company operates, and the product offerings it has, is sticking…
Peekaboo Beans’ Brand Carries Momentum into 2018
On January 22nd, Peekaboo Beans reported an increase of 1600% in stylist recruitment in the first half of January 2018 – its largest recruiting month in history. The company attributes this substantial increase to its launch in the USA, as well as a momentum push within Canada.
“In the USA, 36 billion dollars of products are sold through the direct sales channel and 1 in 7 households in the USA has a direct sales business. Children’s apparel is a 10 billion dollar industry…”
Rising Sales Tied to Direct Sales Model and Stylist Network
In the year following the exclusive direct sales approach, Peekaboo Beans experienced a more pronounced increase in sales than in prior years. Check out the rise between 2012 and 2013.
Furthermore, the company’s sales increased again after building its stylist network. In its recent investor presentation, Peekaboo boasts 1,280 Stylists, which is up approximately 30% year over year.
Peekaboo Beans’ US Expansion
Improving margins and a widespread expansion into the United States are anticipated to drive increased sales and revenue in the coming quarters for Peekaboo.
Peekaboo reported significant (165% increase) margin improvement in Q3 2017, compared to Q3 2016.
Secondly, Peekaboo has recently launched its U.S. customer website along with a fully functional U.S. stylist portal. This portal, at least in part, has resulted in a boost in Stylists for the company.
Peekaboo Beans | Swinging Big
Canada’s market is too small for a clothing company with big aspirations. It always has been. The ‘Holy Grail’ for virtually all product companies, be it in tech or ethically manufactured clothing, is the United States. With more than ten times the population, and a shopping gene built into most households, put simply, it is where the big money potential is. Peekaboo has a unique plan and team to lead it south of the 49th parallel…
The company’s Board of Directors has two members closely associated with perhaps the most famous Canadian clothing company of all-time: Lululemon.
Peekaboo Names New General Manager
On December 12th, Peekaboo announced it had successfully recruited Sandy Spielmaker as General Manager of Operations. With over two decades of experience in the direct sales world, Ms. Spielmaker began her career serving in various capacities at SC Johnson. She held executive positions at Bissell and Johnson Outdoors before moving to Amway, where she was V. P. of Sales for the U.S.
Ms. Spielmaker stated in December that,
“I’m thrilled to help such an amazing organization with a well-loved brand and loyal community. Peekaboo Beans has big dreams, and I’m honored to support the efforts of this talented team and its exceptional stylists to build and grow an incredible company.”
Certainly, Spielmaker will play a part in Peekaboo’s continued U.S. expansion plans.
Peekaboo Director Darrell Kopke is a former member of the group of founders of Lululemon Athletica Inc (NASDAQ: LULU). Lululemon Athletica is one of the largest clothing lines in the world, and had an approximate $11 billion market cap in late-February.
Peekaboo Beans – Current and Target Market
Peekaboo Beans has roughly 1,280 stylists and had sales of CAD$3.46 million in 2015. With demonstrated margin improvement (165% improvement Q3 2017 over Q3 2016), Peekaboo is a direct sales company showing clear gains in the marketplace.
When asking Founder and CEO Traci Costa about the below projections, specifically on 2017, she commented,
“We deleveraged our balance sheet, set the stage for a launch into U.S., launched in the US, which is now our primary focus and improved gross margin dramatically. Also, we partnered with a new factory to continue to see improved cost savings, while hiring strategic key individuals to support growth targets in the U.S.”
In its investor presentation, Peekaboo is projecting $43 million in total sales by 2022, with a big move higher to approximately $13 million in 2019. Bold targets, and time will tell if they can deliver.
Peekaboo’s Team is Locked and Loaded for U.S. Market
Peekaboo Beans has a former Lululemon Athletica founding member on its team of directors (Darell Kopke). Furthermore, the company has engaged a former Lululemon executive, Michelle Armstrong, as a strategic product advisor. Michelle brings over 15 years of experience and leadership in retail, product strategy and merchandise management. Michelle most recently served as Vice President, Global Merchandising Women’s and Accessories for Lululemon athletica, inc.
In October, the company appointed Ms. Cindy Tokoly, as Director of Sales and Field Development; responsible for growing the US and Canadian Stylists network. Ms. Tokoly was previously Director of Sales and Field Development for Matilda Jane Clothing, a US children direct sales company and helped build the company from inception in 2002 to a multi-million dollar company.
Peekaboo also partnered with Exit 21, a global apparel solutions incubator. Founder Erick Siffert stated in late November:
“I have been fortunate in my experiences working at Nike and Lululemon before starting my production company is [sic] 2009. Our goal has always been to partner with premium and established brands that have a strong business plan, a great story and most of all nice people. Peekaboo Beans fits all of these and more. The team is driven and passionate and we are excited to help take Peekaboo Beans to the next level regarding product and profitability. I look forward to building this relationship for many years to come.”
In Direct Sales More Stylists Often Leads to More Revenue
In the business of direct sales, more stylists (reps) typically lead to more revenue. Peekaboo’s number of stylists has taken off in recent months, exceeding 1200. We will be watching the stylist growth in the U.S. closely over the coming quarters as that could be a paramount statistic to the company’s overall growth. The company announced a 108% year over year increase in January month to date sales. A total of 12.35% of sales stemmed from the USA.
When we released our exclusive video on Peekaboo on November 24th, 2017 (below), its shares had last traded for CAD$0.60 per share. Since, Peekaboo Beans’ stock hit an all-time high of CAD$0.99 per share in January. However, it closed trading today at CAD$0.51. Peekaboo’s market cap sits at approximately CAD$9 million.
Peekaboo Beans – 6 Month Stock Chart
Recognize that we are biased toward Peekaboo Beans as the company is an advertiser client and we own warrants of the company. Please take responsibility for practicing your own thorough and independent due diligence. Learn about the risks associated with investing in micro-cap companies of this nature. Pick your spots…
In a company press release from January 29th, Traci Costa, Peekaboo Beans’ Founder and CEO, stated:
“Sales are trending upwards in a big way with the sales in the USA picking up a steady pace. The goal is to replicate this trend month over month and build out and start building out a global strategy.”
All the best with your investments,
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