Kasi Kicks Business Plan — Break-Even and Debt Service

Store break-even at 5,067 pairs against 9,800 at maturity, and debt service across the rollout to four stores.

Break-Even and Debt Service

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8.1 Break-even
8.2 Debt service

8.1 Break-even

Break-even measure	Value	Interpretation
Gross profit a pair	R571	46.8% of the realised price
Variable cost a pair, store	R101	Card fees, shrinkage, packaging and inbound freight
Contribution a pair	R470	38.6% of the realised price
Store fixed costs	R2 381 560	R12 873 per m² a year
Break-even volume	5 067 pairs	14 pairs a trading day
Break-even trading density	R33 387 per m²	Against a mature R83 358
Volume at maturity	9 800 pairs	About 27 a day
Margin of safety at maturity	48.3%	How far volume can fall before the store loses money

	Year 1	Year 2	Year 3	Year 4	Year 5
Gross profit	4 139 943	11 034 789	20 090 146	30 775 681	34 611 499
Variable selling costs	(730 992)	(2 099 412)	(4 059 312)	(6 522 170)	(7 608 260)
Store and central fixed costs	(4 553 685)	(7 890 230)	(11 610 769)	(15 749 367)	(16 694 329)
EBITDA	(1 144 734)	1 045 146	4 420 064	8 504 144	10 308 910
Gross profit as a multiple of fixed costs	0.91x	1.40x	1.73x	1.95x	2.07x
Trading density, R per m²	47 797	60 136	69 408	76 494	83 358

Figure 18. Gross profit against the fixed cost base.

A single store cannot carry the central function, which is why the plan funds two

One store at maturity generates R5 592 200 of contribution against store fixed costs of R2 381 560 — comfortably profitable on its own. But the central buying, planning, warehouse and digital function costs R2 172 125 in Year 1, and a single store’s surplus of R3 210 640 barely covers it before the store has reached maturity. That arithmetic is the structural reason the plan opens with two stores rather than testing the concept with one: the merchandise planner who delivers the 20.5 per cent size-curve advantage cannot be afforded by a single store, and without that planner the store does not deliver the margin the plan assumes. The chain is not an ambition bolted onto a shop; it is the minimum viable configuration.

8.2 Debt service

R	Year 1	Year 2	Year 3	Year 4	Year 5
Opening balance	5 830 000	4 938 521	3 927 049	2 779 433	1 477 348
Interest at 13.46%	784 718	664 725	528 581	374 112	198 851
Capital repaid	891 479	1 011 472	1 147 616	1 302 085	1 477 348
Total debt service	1 676 197	1 676 197	1 676 197	1 676 197	1 676 199
Closing balance	4 938 521	3 927 049	2 779 433	1 477 348	0
of which current portion	1 011 472	1 147 616	1 302 085	1 477 348	0
of which non-current portion	3 927 049	2 779 433	1 477 348	0	0
EBITDA	(1 144 734)	1 045 146	4 420 064	8 504 144	10 308 910
Debt service cover	-0.68x	0.62x	2.64x	5.07x	6.15x
Gearing	43.8%	43.6%	33.2%	12.4%	0.0%

The lender's real security is the stock, and it is unusually good security

Cover of negative 0.68 times in Year 1 and 0.62 times in Year 2 is below any standard covenant, and 1.30 times is cleared only in Year 3 at 2.64 times — after which it rises quickly to 6.15 times as the debt amortises against a growing EBITDA. What makes the ramp underwritable is the collateral. Unlike a restaurant fit-out or a gym’s equipment, R9 670 100 of branded footwear at maturity is genuinely realisable: it is current-season product from brands with national demand, and it can be sold through the trade at a discount rather than scrapped. Equity of R10 300 000 sits ahead of the debt at 63.9 per cent of the funding, and covenants should be tested from Year 3 when the business first has earnings to measure.

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