Allocation: What You Are Allowed to Sell

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• Overview & contents
• i. Important Notice and Basis of Preparation
• 1. Allocation: What You Are Allowed to Sell
• 2. Executive Summary
• 3. The Size Curve: Where Footwear Margin Is Lost
• 4. The Store and the Channel
• 5. SWOT and Competitive Position
• 6. Organisation and Compliance
• 7. Financial Plan
• 8. Break-Even and Debt Service
• 9. Investment Analysis
• 10. Sensitivity and Scenario Analysis
• 11. Risk Analysis
• 12. Implementation Roadmap
• 13. Key Performance Indicators
• 14. Key Assumptions
• 15. Conclusion and Recommendation
• A. Appendix A: Consolidated Financial Summary
• B. Appendix B: Allocation, Size Curve and Store Schedules
• C. Appendix C: Funding, Debt and Stock Schedules
• D. Appendix D: Risk Register
• E. Appendix E: Glossary

1.1 The proposition

Kasi Kicks is a multi-brand sneaker and footwear retailer for Gauteng, opening with two stores of about 185 m² each and building to four by Year 4, supported by a central warehouse, a merchandise planning function and an online channel.

At maturity the group sells 49 239 pairs a year at a blended realised price of R1 528, generating R75 225 919 of revenue and R10 308 910 of EBITDA.

1.2 The market this enters

Two facts frame everything. First, the market is concentrated at the brand level: adidas South Africa holds about 11 per cent of footwear and Nike South Africa about 10 per cent, and both control how their product reaches retail. Second, the market is barely growing — the athletic footwear segment is forecast at around 2.15 per cent a year, from US$901.4 million in 2025 to US$1 102.7 million by 2034. This is a plan to take share from incumbents, not to ride a rising market, and it should be read that way.

The retail side is consolidated and getting more so. TFG operates Sportscene, Totalsports and Sneaker Factory and has brought JD Sports to South Africa; Studio 88 has built a national footprint; Pepkor owns Tekkie Town; and Frasers Group acquired the Holdsport group, including Shelflife, in 2025. A new independent is entering against groups with hundreds of stores and the buying power that comes with them.

One structural fact works in the plan’s favour. Gauteng commands 39.2 per cent of the national market — the largest regional share — supported by the dense retail networks and higher disposable incomes of Johannesburg and Pretoria. A four-store chain in Gauteng is addressing the deepest pool of footwear demand in the country.

1.3 What you are allowed to buy

The most important commercial fact in sneaker retail is that the retailer does not choose the range. Brands allocate. The product that drives footfall — limited releases and tier-zero drops — is rationed, and it goes to the accounts with scale and history. Studio 88 states this openly in its own marketing: limited drops and tier-zero releases, securing stock that others cannot.

1.4 Where the margin is actually lost

A single sneaker style is not one product. It is nine or more products, one per size, and they do not sell at the same rate. About 70.6 per cent of demand sits in four sizes. A supplier assortment or a naive buy spreads units evenly across the run, which guarantees that the fringe sizes are over-bought and must be marked down.

On 1 000 units of one style, a flat buy sells 738 pairs at full price and leaves 261 to be discounted. A sell-through weighted buy sells 953 at full price and leaves 48. Same order quantity, same total cost, R116 960 more gross profit — 20.5 per cent — from nothing except how the order was split by size.

1.5 Financial summary

1.6 The honest assessment

Seven findings matter more than anything else in this document.

▪ You do not control your own range, and that cannot be fixed operationally. Brands decide what an account receives. A new independent competes for allocation against groups with hundreds of stores. The plan assumes 4 per cent of units are limited product and 26 per cent premium general release; if the brands allocate less, the mix shifts toward carryover at R257 a pair against R812. Signed supply agreements should precede any lease.

▪ The size curve is the largest controllable margin lever in the business. Buying to a sell-through weighted curve rather than flat is worth 20.5 per cent more gross profit on identical stock, because 70.6 per cent of demand sits in four sizes. This is a planning discipline, not a buying budget, and it is why the plan funds a merchandise planner from Year 1 rather than Year 3.

▪ Markdown destroys profit faster than it destroys revenue. At a landed cost of R648, a pair discounted 20 per cent still earns R440; at 40 per cent it earns R168; at 55 per cent it loses R36. Every pair that reaches the clearance rail was a buying decision made months earlier, which is why Section 3 treats markdown as a symptom rather than a lever.

▪ Footwear is unusually inventory hungry. The industry turns stock about 4.4 times a year because one style becomes fifty-odd size SKUs. The plan holds R9 670 100 of stock at maturity — 12.9 per cent of revenue — against a R6 500 000 facility that the stock balance exceeds from Year 4. Growth in this business is funded by stock, not by fit-out: the opening stock buy is R5 200 000 against R3 900 000 of fit-out for both launch stores.

▪ The market is not growing, so every pair is taken from someone else. Forecast growth of 2.15 per cent a year against incumbents including TFG, Studio 88, Pepkor and now Frasers Group. At maturity the group is about 0.37 per cent of the national athletic footwear market. The plan wins on range curation, service and community rather than on price.

▪ Year 1 loses money and the covenant is not met until Year 3. EBITDA is negative R1 144 734 in Year 1 with debt service cover of negative 0.68 times. A single store cannot carry the central buying, planning and warehouse function that the chain needs from the outset, which is the structural reason the plan funds two stores at launch.

▪ Trading density is the number that decides everything. Break-even is R33 387 per square metre against a mature R83 358. That mature figure is demanding for South African retail and rests on 9 800 pairs a store a year, or about 27 pairs a day. It is the assumption to test hardest, because the whole model is built on it.