Notshy aims to attract investors and expand internationally
The MCC Group, owner of Not Shy and Absolut Cashmere, saw its sales fall from 28 to 22 million euros between 2019 and 2020. But the cashmere specialist, founded by Olivier Criq and Jean-Pascal Candau in 1998, recorded a nice rebound to 33 million euros in sales in 2021 and expects to reach 44 million euros in 2022. According to its founders, this positive trend can only be further developed.
"During the first lockdown, we decided to limit the risks. We reduced the order backlog by two million euros from 12 million euros. Consumption picked up quickly and we responded on the basis of our existing inventory. We managed to preserve a minimum of profit. And the following year we made an extraordinary increase to 33 million euros with a balanced growth between the approximately 40 points of sale, wholesale and the beginning of our work in e-commerce, which is beginning to pay off and represents about 10% of our turnover," said the company.
In 2022, the group should finish the year well above its initial target of 40 million euros and, according to Criq, close in on 44 million euros, owing to "a good winter sales campaign".
However, it has not been smooth sailing. The group decided to discontinue its third brand Kshmr Tribu, whose stores have gone back under the names NotShy and Absolut Cashmere. In addition, due to the war in Ukraine, the company had to put its activity in Russia on hold.
Raw material prices and transportation costs have skyrocketed, and the group has already raised its prices over the last selling season. "What has skyrocketed are the transportation costs, and clearly some of them are exaggerating. We used to bring our products from China and Mongolia by boat but now it's much more expensive. We are trying to reorganize the transport by using trains instead, but the situation in Russia and Ukraine has also complicated matters," said Criq. "Raw material prices have also significantly increased. This is due to a growing demand, but also to the fact that the temperature is rising and that, in fact, goats produce less wool. The price of cashmere has jumped by 30%, knowing that labor costs are also increasing. We have the necessary networks and this allows us to try to temporize, but we had no other choice than to pass on a part of these price increases. If we don't make a margin, we can't operate."
Nevertheless, the group noted that demand remains high for its cashmere products, particularly among its multi-brand clientele. While the group achieves a little more than a third of its sales through directly operated points of sale, including corners in department stores as well as its 23 Notshy boutiques and six Absolut Cashmere stores, the majority of its business continues to be done with its longstanding partners.
"Our core business is wholesale and we have a total of 2,500 customers," said Criq. "We have been by their side during the lockdowns, we have deferred payments and some of them have not forgotten that. We are in the process of starting up omnichannel with 30 very important customers. These customer-partners will have direct access via a tablet to a dedicated stock shared with the stores and the site without any financial commitment. We are starting with an inventory of 30,000 pieces. This will not necessarily generate a major turnover for the brand, but it will create trust between the customer and the store. This is essential for us. It's a project that we're going to roll out over two years starting this fall."
MCC is looking to strengthen its relationship with the retail industry, as well as its presence in new markets. To do so, the group is currently considering whether to open its capital to new financial investors. In January, the founders bought out the share of their minority shareholder, who had joined five years earlier. This way of exit was agreed in advance with the two owners. Taking advantage of the group's rapid growth, the two founders hope to attract investors who could support them in their future endeavors.
"We are at a crucial stage in the brand's development," said Criq. "We can manage it on our own, but we can't start opening a flagship store and expanding retail operations before bringing in new investors. I prefer to discuss these things first with a potential partner with whom we will validate a development plan over three or four years. We are always looking for new partners. By developing our retail network and growing our e-commerce to represent 25% of our sales, I believe that this brand has the potential to make 100 million euros in five years, but we need to become more international."
MCC, which has 200 employees including 60 at its Paris headquarters, is currently present in Switzerland through a subsidiary and, after having first tested in other European countries, intends to seize opportunities in these markets. Notshy should therefore open stores in major European fashion cities to increase its brand awareness as well as to test its potential in emerging markets such as in certain countries in South America.
It is yet to be seen whether the wholesale specialist will succeed in winning over investors like companies such as JOTT and Fusalp have recently done. "We have a very attractive balance sheet. So why not us!" exclaimed Criq.
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