Recent retail IPOs has Indochino considering going public, CEO says
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TORONTO — Indochino is mulling over the idea of an initial public offering following the recent splash Canadian retailers Aritzia and Canada Goose made in their trading debuts, says the CEO of the Vancouver-based suit maker.
Drew Green, who took the helm two years ago, says the company has been "actively researching" the prospects of taking Indochino public though such a move may still be years away.
"I think that opportunity will present itself for us," Green said in an interview this week.
"Right now, certainly this year, we're entirely focused on continuing to operate and improve the business without putting a deadline on when we need to do that by."
Last month, Toronto coat maker Canada Goose (TSX:GOOS) made its market debut in Toronto and New York with a public offering valued at $340 million. Vancouver women's fashion house Aritzia (TSX:ATZ) raised $400 million in an IPO last October.
Both companies went public in pursuit of big expansion plans. Their shares soared in their initial trading days, though they have since levelled off.
Indochino has set a lofty target of operating 150 stores across Canada and the U.S. by 2020, which would see its footprint grow more than tenfold in less than three years. It's an ambitious goal for a company that started out as an online-only retailer 10 years ago.
Since then, it has opened a dozen bricks-and-mortar locations with one more set for the end of this month. Indochino plans to launch five more stores, all in the U.S., this year.
"Whether it's 2020 or 2025, this business has a potential to get to 150, 250 showrooms, but we're always going to measure and recalibrate as we go along," Green said.
He said the privately-held company saw sales grow 54 per cent year-over-year, with more than half of those coming from its online business, and comparable same-store sales climbing 32 per cent.
Last year, it received a $42 million investment by Chinese manufacturer Dayang Group, which bought a less than 25 per cent stake in the company. In exchange, Indochino also has the use of dedicated production lines at Dayang's facilities in Dalian, China.
Green said Indochino's goal is to bring made-to-measure dress shirts and suits to the masses, which means it needs to continue to expand its physical presence if it wants to reach customers outside of its mainly millennial base.
Part of that strategy is to open many of its stores in top-tier shopping malls, where it can ensure it can build its brand presence and appeal to an older customer who may not be comfortable spending more than $400 online on a custom-made suit, he added.
Retail marketing expert Brynn Winegard expressed doubts over whether Indochino will be able to pull off its "aggressive" expansion plans.
"They're projecting about 140 more stores in three years. That's insurmountable," said Winegard, of Winegard and Company.
"They're basing that on anywhere they've opened up a showroom, they've seen an increase at their online store … but that will start to dwindle when you have stores everywhere."
Green said it costs Indochino much less than a traditional retailer to open a store — a figure it pegs at under $100,000 - because none of their locations house any inventory.
For now, he said the company remains focused on continuing to capture the male market, which it sees still has potential to grow. Once it does that, it would consider expanding to women's and children's custom wear, and opening up stores overseas, particularly in Japan, he added.
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