Koovs PLC Strategic Acceleration Plan (3167G)

TIDMKOOV

RNS Number : 3167G

Koovs PLC

01 March 2018

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014.

Koovs plc ("Koovs" or the "Company")

Strategic acceleration plan to deliver scale and profitability

Capital Raising Update

Trading Update

Overview

Following the success that Koovs has achieved to date in establishing itself as a leading affordable fashion brand in India, the Board has performed a review of its operations to identify medium-term objectives to support its future growth plans. The Company continues to be actively engaged in a dialogue with potential capital providers, whilst prudently managing cash resources until the first round of new financing has been closed and the next stage of major capital investment in the Koovs journey begins.

Commenting on the strategic acceleration plan Lord Waheed Alli, Chairman of Koovs, said:

"With over GBP70 million invested in Koovs to date and with a series of business building successes achieved there is a clear opportunity to capitalise on the platform that we have built to unlock superior shareholder value over the coming years."

Koovs achievements since IPO in 2014

Koovs sells affordable western fashion in India online. In the four years since its IPO in London, the Company has succeeded in establishing:

   --         Significant and growing social media following and customer engagement 
   o    2.4 million followers including 1.9 million on Facebook and 500,000 on Instagram 
   --         A leading brand that is fashion-forward and affordable 

o Recent RedSeer survey showed that Koovs continues to outperform other platforms on product variety and quality

   --         A technology platform delivering seamless customer experience 

o In FY17 Koovs implemented the latest modular microservices architecture to deliver scalable performance, rapid technology development and innovation

   --         Koovs' own label and designer collaborations already leading fashion trends in India 

o 40% of FY17 sales were Koovs Private Label, and four exclusive collections were launched with Manish Arora, Hattie Stewart, Gauri & Nainika and Henry Holland

   --         Highly experienced Management team 
   o    Over 125 years' combined retail and technology experience 
   --         First class logistics and lead times 

o Average 'order to delivery' time in January 2018 was 3.5 days compared to average of over 4 days amongst India e-tailers

   --         Industry-leading customer care metrics 

o Forrester survey ranked Koovs No.1 for "Best Customer Experience" among online-only retailers in India and RedSeer awarded Koovs the highest Net Promoter Score amongst peers

Investment and funding

Over GBP70m has been invested to date in the Koovs' journey to becoming India's leading affordable fashion brand. Capital providers include successful e-commerce and media entrepreneurs, substantial corporates in India and leading institutional investors, and the Board actively continues the previously announced dialogue with potential new investors.

The Board has now determined that a total of up to GBP50m of further investment will be required to fund the acceleration plan. A significant part of this investment will be devoted to marketing and brand where Koovs has clear evidence of a strong correlation between cash investment and sales achieved.

In the immediate term, and pending a first round of new investment into Koovs, the Board will continue to focus on cash preservation. As at 1st March 2018 the Company had cash balances of GBP3.5m, with future monthly outgoings forecast to be GBP0.75m per month.

The exact timing and amount of fundraises will balance the Board's desire to provide short term working capital and to invest quickly, in scale, to take advantage of the opportunities presented, with the obvious need to limit dilution of existing investors as much as possible.

Trading update

H1 gross sales, as previously announced, were flat at GBP7.9m, and the Company now expects H2 gross sales to be down due to the cash conservation plan highlighted above. Accordingly, FY18 sales are expected to be GBP14.5m (FY17: GBP18.6m). EBITDA is expected to improve to a loss of GBP14.4m (FY17: GBP19.6m), whilst the Company's trading margin has continued to increase to 11% (FY17: +4%).

Mary Turner, Chief Executive of Koovs, added:

"We are extremely excited about the opportunity which lies ahead of us. Growth is already returning to India's ecommerce market following the introduction of demonetisation and the Goods and Services Tax, and we believe that the strong fundamentals underpinning the market's long-term growth remain undeniable.

As India's best-established affordable fashion brand with sector leading customer service and a significant social media following with the benefit of investment we will be well positioned to scale up the business by leveraging our competitive advantages."

For further information please contact:

 
 Media enquiries: 
  Headland 
  Lucy Legh / Rob            Tel: [phone] 
  Walker / Charlie           4822 
  Twigg 
 Koovs plc 
  Mary Turner/Robert         Tel: [phone] 
  Pursell                    0170 
 Peel Hunt LLP 
  Dan Webster /              Tel: [phone] 
  George Sellar              8900 
  Jock Maxwell Macdonald 
  (ECM) 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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March 01, 2018 02:01 ET (07:01 GMT)