3 Sep 2019 07:00
3 September 2019
Koovs plc
("Koovs" or the "Company")
New Brand launched and further roll out of Concessions
Koovs plc (AIM: KOOV), the Western fashion experts for online Indian consumers, is pleased to announce a new contract with Future Lifestyle Fashions Limited ("FLFL") to develop a new and exclusive fashion range for FLFL's Brand Factory (the "Brand Factory Contract").
Under the terms of the Brand Factory Contract, Koovs will develop an exclusive range of menswear clothing for Brand Factory on a wholesale basis, with no right of return if the goods are not sold. The new range will be available under the Chelsea King brand name and, initially, will be sold in 25 Brand Factory stores. The first season, commencing Sep-19, is expected to generate wholesale revenues of approximately £0.6m, and be profitable after deducting the cost of the goods sold. In addition, the Brand Factory sales will pass through Koovs' supply chain which will also benefit from the increased volumes. The Brand Factory Contract is valid to 31 March 2022.
In addition to the Brand Factory Contract, the Future Group Strategic Partnership will see the further expansion of retail distribution for Koovs Private label in Central Stores concessions and in new Brand Factory concessions ("Concession Expansion").
As part of the Concession Expansion, Koovs Private label will be rolled out in additional five Central Stores, two in Bangalore and one in each of Hyderabad, Noida, Pune making eight stores in total. This revised agreement signed on 2 July 2019, expands from that signed on 3 October 2018 (as announced on 7 May 2019) and is expected to generate revenue over the next 12 months of c. £0.15m and be profitable after deducting the cost of the goods sold and a 30% commission payable to FLFL on the value of goods sold.
The distribution of Koovs Private Label Menswear will also be piloted in three Brand factory stores - Bangalore, Mumbai, New Delhi. This agreement, signed on 15 June 2019 and valid until 31 March 2022, is expected to generate revenue over the next 12 months of c. £0.1m and be profitable after deducting the cost of the goods sold. There is no commission payable to FLFL on the value of goods sold.
Mary Turner, Chief Executive Officer of Koovs plc, commented: "The signing of this latest contract with FLFL, to develop a completely new fashion brand, and the further expansion of our Strategic Partnership with Future Group brings more growth opportunities for both parties. We remain convinced of the long term potential for the Indian online fashion market and for Koovs in particular."
Related party transaction
For the purposes of the AIM Rules for Companies ("AIM Rules"), FLFL is a substantial shareholder in the Company and therefore a related party. As such, the entering into the Brand Factory Contract constitutes a related party transaction pursuant to the AIM Rules.
The directors of the Company, other than Avni Biyani, who represents FLFL on the board of the Company, having consulted with Strand Hanson Limited in its capacity as the Company's nominated adviser for the purposes of the AIM Rules, consider the terms of the Brand Factory Contract to be fair and reasonable insofar as shareholders are concerned.
Further detail on the Brand Factory Contract
Brand Factory, part of the Future Group, has 93 stores across India selling both international, domestic and own label brands at discounted prices with discounts on products usually ranging from 20% to 70%. Koovs products will be sold to Brand Factory at a price that will allow both Koovs and Brand Factory to make a positive gross margin after the discounts have been applied.
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For further information please contact:
Koovs plc
Mary Turner / Robert Pursell
Tel: +44 (0) 20 7151 0170
Strand Hanson Limited (Nominated & Financial Adviser)
James Harris / Ritchie Balmer / Georgia Langoulant
Tel: +44 (0) 20 7409 3494
Whitman Howard Limited (Corporate Broker)
Nick Lovering (Corporate) / Mark Murphy (Institutional Sales)
Tel: +44 (0) 20 7659 1234
Media enquiries:
Newgate Communications
Adam Lloyd / Fiona Norman
Tel: +44 (0)20 3757 6880
E: koovs@newgatecomms.com
The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No.596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.
Notes to Editors:
About Koovs
·; Koovs is a UK business that has built KOOVS.COM into India's leading online western fashion destination. Koovs' fashion brands are designed and developed in London exclusively for the young Indian fashion market where two thirds of the population are under the age of 35. It has 2.7m following and half a million active customers.
·; The tremendous potential of the Indian fashion market has been further underlined by the Strategic Partnership with Future Lifestyle Fashions Limited (FLFL) which is part Future Group - one of India's leading retail businesses and one of the top 10 fashion apparel companies in the world
·; Koovs' proprietary online technology platform powers KOOVS.COM and is a proven market-leading success in India's rapidly expanding e-commerce market. The capability and scalability of the platform has been recognised by FLFL which has contracted Koovs to build and maintain the online platform for its Brand Factory retail format. For more information, please visit www.koovs.com and follow us on Facebook, LinkedIn, Twitter @mykoovs and Instagram @koovsfashion.
About Future Group
Future Group is one of India's leading consumer, retail and services companies covering fashion, food and homewares. It owns over 60 brands, operates close to 2,000 retail stores spanning over 22 million square feet and attracts a footfall of over 500 million a year. Future Group sells in the region of 300 million garments a year, making it one of the top 10 fashion apparel companies in the world. Future Group also has one of India's most unique and rapidly-growing digital payment platforms, Future Pay, which has an active user base of over 6.5 million.