- ECGI Holdings signed an agreement in December 2023, creating Pacific Saddlery, Inc., an emerging brand targeting the luxury equestrian apparel, tack, and accessories marketplace, and continues plans to move forward in that market
- In support of growth plans, the company recently secured the first of two $125,000 convertible note financings, with the second convertible note expected to close in July
- ECGI intends to use the net proceeds from the financings to significantly enhance Pacific Saddlery’s product development, helping the brand expand its offerings and capture a significant share of the U.S. luxury equestrian market
- The U.S. luxury equestrian tack and apparel market is valued at $300 million and is expected to grow at an annual rate of 4-6%
- Besides tapping into the expected growth, ECGI’s venture into the luxury equestrian market is buoyed by attractive gross and net profit margins
December of 2023 saw ECGI Holdings (OTC: ECGI), a diversified holding company, make a strategic move toward building luxury brands. The company signed a joint venture share purchase agreement, creating Pacific Saddlery, Inc., an emerging brand targeting the luxury equestrian apparel, tack, and accessories marketplace. The agreement aligned with – and continues to align with – ECGI’s ongoing evolution, new strategic direction, and, according to CEO James Steigerwald, “commitment to building luxury brands” (https://ibn.fm/iCPAf).
A widely held belief by ECGI’s management is that the luxury equestrian marketplace is an ideal focus for investment in building a globally respected boutique brand. This belief has seen the company secure financing to facilitate further product development for Pacific Saddlery. The financing follows Pacific Saddlery’s successful mobile retail trailer launch earlier this year, and is expected to supercharge the company’s strategic growth and expansion endeavors (https://ibn.fm/nQtFh).
According to the June 4 announcement, ECGI successfully secured the first of two $125,000 convertible note financings, with the second convertible note expected to close in July under similar terms. After deducting applicable fees, ECGI will receive $100,000 in growth capital from each convertible to support major initiatives.
Mr. Steigerwald congratulated the company’s dedicated investors, who have continuously shown unwavering support, adding, “2024 is shaping up to be a transformative year for ECGI. Securing this financing allows us to significantly enhance Pacific Saddlery’s product development. We are thrilled to secure this pivotal financing, reflecting the unwavering confidence in our strategic vision. This capital infusion will propel Pacific Saddlery’s growth and enhance its product development following the success of the mobile retail trailer launch.”
U.S. Luxury Equestrian Tack and Apparel Market
ECGI notes that further product development for Pacific Saddlery will help expand the emerging brand’s offerings, capturing a significant share of the U.S. luxury equestrian tack and apparel market, a market that is uniquely profitable and consistent, with fewer pressures to “go public”. Valued at $300 million annually, the market is expected to experience steady growth at an annual growth rate of about 4-6%. This growth is expected to be driven by increasing interest in equestrian sports and leisure activities among affluent consumers, as well as innovations in product design. The strategic move also positions ECGI Holdings alongside key leaders in the equestrian market, including Hermès, Charles Ancona, and CWD Sellier.
The luxury equestrian market is segmented into two:
- The equestrian apparel segment, which comprises high-end riding gear, including breeches, jackets, boots, and helmets
- The tack and equipment segment, which includes premium saddles, bridles, and other tack, often custom-made or from renowned brands
With promises of affluence, prestige, customization, and quality, the market has spurred interest among the wealthy, affluent, and equestrian sports enthusiasts. Accordingly, major brands like Hermès, Charles Ancona, Pikeur, Animo, and Cavalleria Toscana, which focus on the apparel segment, and CWD Sellier, Hermès, Stubben, and Devoucoux, which target the tack and equipment segment, increasingly compete to deliver on these promises and, as a result, enjoy the attractive revenues and margins the industry has to offer.
Attractive Gross and Profit Margins
On average, apparel like high-end riding jackets, breeches, and boots can cost anywhere between $200 to more than $1,000 per item, while premium saddles and bridles range from $1,500 to over $10,000, depending on the level of customization and brand prestige. Usually, the premium pricing of apparel, tack, and equipment translates to high gross margins and net profit margins. For instance, luxury equestrian brands often enjoy high gross margins of 50-70%, with net profit margins varying between 10-20%.
What makes the luxury equestrian market attractive to the likes of ECGI, Pacific Saddlery, and other players is that these net profit margins are often higher than the retail market’s average. The profit margins translate to higher profitability for equestrian companies, ensuring a continuous flow of working capital. According to observers, this explains why there are no public equestrian companies – such companies are usually so profitable that they consistently have enough working capital to remain private.
As an additional testament to the veracity of this observation, Dover Saddlery, Inc., a leading specialty retailer and the largest omnichannel market of equestrian products in the U.S. at that time, was taken private in 2015. Until its delisting, the company was traded on the Nasdaq Stock Market (https://ibn.fm/D9zTc).
The attractive dynamics of the luxury equestrian market drew the interest of ECGI Holdings, explaining its decision late last year to sign the agreement that created Pacific Saddlery. Since then, the company has made strides to capture a share of the burgeoning U.S. luxury equestrian apparel and equipment market, with the latest financing supporting this resolve.
For more information, visit the company’s website at www.ECGIHoldings.com.
NOTE TO INVESTORS: The latest news and updates relating to ECGI are available in the company’s newsroom at https://ibn.fm/ECGI
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