Conclusion and Recommendation

Jump to section

• 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

Kasi Kicks is a multi-brand sneaker and footwear retailer for Gauteng, building from two stores to four across five years in the province that holds 39.2 per cent of the national market. It competes on curation, size availability and service in a category where the brands decide what each account may sell.

At maturity the group sells 49 239 pairs at a blended realised price of R1 528, generating R75 225 919 of revenue and R10 308 910 of EBITDA on R16 130 000 of capital.

15.1 What the numbers support

▪ A controllable margin advantage. Size-curve discipline is worth 20.5 per cent more gross profit on identical stock, resourced from Year 1 at R44 000 a month and accounting for a large share of the profit variance in the business.

▪ A store model with real headroom. Break-even at 5 067 pairs against 9 800 at maturity — a margin of safety of 48.3 per cent, or R33 387 per square metre against R83 358.

▪ A return that clears a hurdle with room to spare. 39.4 per cent project and 40.1 per cent equity return, with net present value positive at 22 per cent and still 34.4 per cent at a three and a half times exit.

▪ Security a lender can act on. R9 670 100 of current-season branded footwear at maturity is genuinely realisable through the trade, which is unusual collateral for a specialist retailer.

15.2 What the numbers do not support

▪ Signing a lease before the brand agreements. A fitted-out sneaker store with no allocation is the worst outcome available in this industry, and it is irreversible for the length of the lease.

▪ A plan built on tier-zero volume. Limited product is 4 per cent of units and 9.7 per cent of gross profit, and it goes to the accounts with scale and history. It drives footfall; it does not pay the rent.

▪ Buying flat because the assortment came pre-packed. A flat buy leaves 261 pairs in 1 000 to be marked down while the core sizes stock out. That is R116 960 of gross profit given away on a single style.

▪ Distributions during the projection. Stock reaches R9 670 100 against a R6 500 000 facility and exceeds it from Year 4. The balance is funded from retained cash.

15.3 Recommendation

On those conditions this is a sound specialist retail investment in a market that is not growing and therefore unforgiving of poor execution. The advantage on offer is not a better shoe — every competitor sells the same product — but a better buy: the discipline to order nine sizes in the proportions customers actually wear them, in a category where most of the industry still orders them evenly and marks down the difference.