ghurka relaunch - Robert Santore

GHURKA RELAUNCH
Ghurka Trading & Design LLC
New York City
USA
Experienced Management Team: A team of career professionals with 20 years
average experience has been assembled for this venture. Equity motivated, this group
includes former executives from several large retail brands, Coach and Burberry among them.
CEO
John Reuter
CFO & Strategy
VP Sales
Dir Merchandising
VP Operations
VP Communications
Janet Carr
Betsy Martinelly
Joan Jenkins
Jennifer Traversi
Pam Bristow
10 Years Leading Strategy
Coach
-
-
12 Years CEO experience;
participation in $500M value
creation / 5 companies
- Participated in $200M in transactions
- Multiple exits and PE cos.
- Built $100M publishing company;
sold to Time Warner
- 3 Boards
- Harvard Business School
Consumer Product, retail,
wholesale, distribution, and
manufacturing
GAP Strategy
Booz Allen Strategy
Consulting
16 Years Sales & Merchant
Burberry & Donna Karan
- $100M sales resp
- Burberry relaunch
- Deep at Saks, Barneys,
Neiman, Nordstrom
- 5 Years at Donna Karan
12 Years Merchandising
Burberry
- Sales and Merchandising
- Mulitiple categories
- Responsible for building
several multi-million dollar
lines at Burberry
- International experience
20 Years Retail
Operations Mgmt
-
Alice & Olivia
Valentino
Hugo Boss
Retail & Wholesale ops
Cust Svc, IT, Fulfillment
Has managed 50+ stores
15 Years in Branding,
Communications, PR
- Lacoste, Diesel, Virgin
- Coty, Target, Starwood
The Elite Ghurkas: At a UK military auction in 1974, craftsman Marley Hodgson
bid to win on a Ghurka officer’s campaign gear. Inspired by the functional design of the
decades-old fittings and the storied ferocity of the Ghurkas, he founded The Original
Ghurka Bag Co. to manufacture leather gear for present-day warriors.
e’s
“If a man says h
not afraid to die,
he’s either a liar
... or a Ghurka.
- Churchill
Gallipoli: The Ghurkas
were some of the last to
fall in the brutal battles
for the Turkish peninsula
Winston Churchill fought
with the Ghurkas in WWI
Ghurka Leather Gear: Hodgson created over 300 unique designs
between 1975 and 2002, each numbered, named, and hand-sewn by artisans at his
Norwalk, Connecticut workshop. The Company’s sales peaked near $15 million in
the late ‘90s, before Hodgson sold and retired to his Colorado ranch in 2002.
Design No. 5
Design name
Re-Launching with a Proven Success Model: Starved for resources in a
large portfolio company, Ghurka’s sales slipped below $2 million between ‘02 and ’11, when
John Reuter, a private equity entrepreneur, acquired the trademark. A longtime Ghurka fan,
he is now implementing the heritage-brand re-launch model proven by Coach and Burberry.
HIGHLY LIQUID CATEGORY WITH ‘TROPHY’ VALUATIONS
COMPANY
REV
EBITDA
MKT CAP
EV/EBITDA
MKT CAP/
REVENUE
BURBERRY
$2,274
$361
$5,690
15.41
2.50
BULGARI
$1,503
$119
$5,202
43.39
3.46
COACH
$3,957
$1,152
$17,600
14.19
4.45
FERRAGAMO
$1,030
$81
$3,290
41.02
3.19
JIMMY CHOO
$243
$61
$890
14.64
3.66
POLO
$5,570
$994
$11,380
10.48
2.04
PRADA
$2,670
$353
$15,000
42.49
5.62
TIFFANY
$3,085
$601
$9,320
15.51
3.02
*US $Millions
Burberry and Coach are the proven success models the Company studies and seeks to emulate.
Back to Basics Business Plan: Building Ghurka into a global accessories
brand begins with fixing what’s broken: product, distribution, and marketing. The Brand
has had no new product in years; distribution in 2011 was limited to 22 doors and a small
retail kiosk; and marketing has been virtually non-existent a decade. All are being re-built.
STRATEGY: FIX WHAT’S BROKEN
Add New Products
- First collection
- Re-Introductions
- New Products
Add Distribution
- Open Store II / Soho
- Open major dept store
- New internet site
* Bergdorf Goodman is among the retailers that has taken on Ghurka since the relaunch began.
Add Marketing
- Introduce New Logo
- Advertising Campaign
- Digital Campaign
- Public Relations
The Men’s Premium Market: The Men’s Premium Bag and Luggage categories in
the US have annual sales of $3 billion. Segments into which the brand can expand increase
the market universe to $17.5 billion before considering women’s or international sales.
US Men’s Premium Accessories Market ($billion)
$6.0
$1.5
$17.5
Luggage
Total
$3.0
$3.0
$2.5
$1.5
Bags
>$100
Watches
>$100
Dress
Shoes
>$100
Eyewear
>$100
Outerwear
Source: Ghurka Internal Analysis and multiple 3rd party syndicated research reports.
Positioning vs Competition: Pricing is
focused in the $600-$1200 range; more luxury
than domestic competitors, but more accessible
than European brands.
$2260
..
Berluti
Vuitton
Bottega
Gucci
Ferragamo
$2100.
$1800.
Ferragamo
Bottega
Ghurka
Tumi
Filson
Coach
Cole Haan
$595.
Tumi
$498.
Coach
Examiner
$1095.
$425.
Marc Jacobs
$398.
Orvis
$375.
Jack Spade
$375.
Filson
The Real Asset: Brand Awareness Ghurka was acquired as an asset
purchase -- only the trademark, patterns, and inventory were included. The real asset,
however, is exceptionally strong latent brand awareness created over 35 years. This brand
recognition reduces the cost of building the brand by millions of dollars and provides a
powerful tailwind for relaunch.
AWARENESS REPLACEMENT COST: $12-$15M
Brand
Aided
Awareness
Awareness as a
Luxury Leather
Coach
96%
82%
Cole Haan
81%
62%
Tod’s
43%
31%
GHURKA
25%
17%
Hunter
23%
9%
Barbour
21%
10%
Goyard
14%
9%
Moncler
12%
7%
Source: Bonney Research, 2011
Target Audience Sample
- Men and Women
- Age 35 - 75
- HHI > $200,000
- College Graduates
- Enjoy travel and Adventure
- 1+ Intl Trip / Year
- Spend $2,500+ / year on clothing
- Top 10 MSAs
Sequencing Growth & Capital: Management sees three distinct phases to the
Company’s growth in preparation for an Exit:
1. Initial “proof of concept” period of three years, to polish the model. 2012 - 2014
2. Expansion, via a mix of additional retail stores, product categories, and international.
3. Consolidation of the business and preparation for exit.
REVENUE
15%
EBITDA
VALUATION
1.5X REV
VALUATION
14X EBITDA
$10
$1.5
$15
$21
$25
$3.8
$38
$53
$50
$7.5
$75
$105
$100
$15
$150
$210
$200
$30
$300
$420
$500
$75
$750
$1050
Figures in US $Millions
At $10M rev,
investors recover
capital in sale via
liquidation pref
Phase 1: Proof of
concept/model
Phase 2: Recap
& Grow
Phase 3:
Consolidate
Exit
Pro Forma Income Statement 2012 - 2017
The Deal: Upon exit or a liquidity event, Series A Preferred Investors will receive
return of their principal and a simple 7% coupon (PIK); thereafter, Series A and Common
shareholders will divide proceeds proportionally. Standard governance measures in place.
SERIES A PREFERRED ROUND
US $
Total Series A Preferred
16,500,000*
Total Series A Placed & Committed
12,507,000
Remaining Available Equity
3,993,000
*The Board has approved an optional, additional $2M in Series A stock
for placement, should the Company require a cushion. Valuation TBD.
Series A
- Participating
- Pref / 7%
- Liq. Pref
- $8.6M pre
- Governance
68%
20%
Founder/CEO
12%
Mgmt Pool
NOTICE
Success is best defined as
unremitting attention to purpose.
- Benjamin Disreali
There ain’t no Coupe de Ville hidin’ at
the bottom of a Crackerjacks box.
- Meatloaf
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