PORTFOLIO COMPANY NEWS
Active Ride Shop President Esmail Mawjee on Opening New Doors
On the heels of partnering with investment firm Tengram Capital, Active Ride Shop is making plans to roll out a business expansion that could double its footprint over the next five years. This type of growth is nearly unprecedented in a market that is seemingly still economically challenged, and we caught up with Active Ride Shop President Esmail Mawjee to understand more about the Southern California retailer's growth plan, why he sees expansion as a viable option, and some additional background on the company's new investor, which is also involved with another well-know brand within the industry.
How did the partnership with Tengram Capital come about? How long has it been in the works?
Active's ownership was looking for some time for a partner to provide growth capital to build on the company's momentum and fund future growth. During the search for the right partner, Rick Mina was introduced to us, who in turn introduced us to Tengram.
Rick has an impressive background in specialty retail, having held positions as president and CEO of both Foot Locker (North America and Europe) and Champs Sports.
The deal between Active and Tengram was in the works for six months before the deal was reached.
Tengram Capital Partners respects Active's current management team for what has been accomplished in the last five years with limited financial resources. Tengram is a brand-focused consumer private equity fund with experience in both action sports and specialty retail. Tengram is also involved with DVS Footwear. We are proud to have Tengram as a partner, and look forward to working together to reach the company's full growth potential.
In an interview with TW Biz last year, you mentioned that 21 stores felt like the right size for Active at the moment. What changed since then as far as your business goes to convince you that opening new storefronts was now a viable option?
There have been many changes in the retail market in general, and action sports retail in particular since my last interview with Transworld Business. Over the course of the year, we identified growth opportunities for new retail stores, as well as in our online and mail order business channels. Those opportunities were certainly factors that led to our decision.
As you know, Active was acquired by a new ownership which I was part of five years ago. The first couple years were a time of stabilization, and we have seen revenue growth during the last three years. Active's management team created this forward momentum, and with Tengram as an investment partner we are now positioned to capitalize on the opportunities we have identified.
What makes Active Ride Shop's stores unique?
Our stores offer exceptional, friendly and knowledgeable customer service. Our retail associates connect well with our customers and the communities in which we have a presence. Many of our associates are rooted in the culture and the lifestyle of skate, snow and surf. We offer a compelling mix of product between the brands we carry and the Active house brand. Active is focused on the core, and will remain so under this new partnership. Active sponsors the most elite skateboarders and snowboarders in the industry. Lastly, our strong brand partnerships create unique build-outs in the stores and co-host special events for our customers to experience brand stories in an authentic, unique and exciting way. I believe these are some of the factors which have contributed to the Active brand's loyal following.
What is your overall take on Active's ecommerce business? Is it growing, staying steady, etc.?
Active's ecommerce business has remained steady, which is good news because this sales channel continues to be more profitable than it was in years past.
Active's mail order and ecommerce businesses have always been important to the company as ways to fuel the brand experience and generate sales. With Tengram's investment and expertise, we will now have the opportunity to upgrade our e-commerce platform to provide a better customer experience to a wider audience and continue to grow the business in tandem with our brick and mortar expansion.
How much growth have you seen in existing stores over the past 12 months?
As a private company, we aren't able to release specific sales figures.
>What other parts of the business will the investment help grow?
In addition to funding future brick and mortar expansion, teaming up with Tengram will upgrade Active Ride Shop's existing doors and our digital infrastructure. The investment will also be used to upgrade our information systems capabilities across the store base and distribution center.
Do you have a rough idea of where the new shops will be located? Are you sticking to the SoCal area or will Active expand to other regions?
Initially, we are going to look at the white space that already exists in SoCal where our brand resonates well with the consumer. The next phase would be to expand into Central and Northern California. The third phase would involve expanding outside of California, with a focus on the Southwest and Northeast.
What will the roll out timeline look like?
We would like to grow incrementally by strategically opening new doors over the next few years. The timing in each phase of the growth will be determined by the prevailing market and economic conditions at the time. We would hope to more than double the current footprint over the next five years.
What are your thoughts on the overall state of retail? What are some opportunities you see within the market moving forward?
As you are well aware, the present environment remains challenged for most retailers in our space. That being said, I am quite confident about the unique shopping experience we can give to the consumer that is authentic, exciting, and relational.