Less than four years ago, Fritidsfabriken, a homemade online shop went live. Behind the company were Pernilla and Niclas Nyrensten with a start-up capital of SEK 300,000. Success followed quickly and Clearwater has now helped Fritidsfabriken in bringing in a partner new that will help Fritidsfabriken to continue its growth journey.
“It all started when we were selling outdoor clothes of other brands at outdoor fairs. I talked to girls who thought that the clothes fitted badly, as if they were just rebranded men’s clothes. And both women and men were reluctant to wear their clothes outdoors; one person feared getting blueberry stains on his SEK 2,000kr trousers”, says Pernilla Nyrensten CEO at Fritidsfabriken.
“There was clearly a gap in the market”
What was missing was well-fitting outdoor clothes for both men and women. Clothes that cost half of what the leading brands in Sweden are charging, while they retain the same high quality and functionality. Thus, RevolutionRace was born.
“We have created our own niche in the outdoor industry. We make outdoor clothes that work both in town and on top of Mount Kilimanjaro; leisure clothes flirting with street fashion. And since we only sell the clothes via our own online shop, we skip one, sometimes two, steps in the traditional supply chain. We can keep prices at a low level”, says Niclas Nyrensten, product manager at Fritidsfabriken.
“Without Clearwater Sweden, we would never have reached a valuation of that level. I think their contribution added an additional 50%, if not double.”
Investors are knocking on the door
By keeping costs at a low level, Fritidsfabriken has been able to retain a high profit margin. Even this year, when the turnover is expected to amount to SEK 240 million, the profit margin forecasted to be 35%. Fast growth and high profitability have attracted many investors.
“When the investors came knocking on the door, we felt it was the right time to bring in a new partner. At the end of last year, I was designer, CFO, CEO and logistician all at once, so I was a little weighed down. We needed a strong organisation with competent people who could introduce us to the right markets”, says Pernilla.
Fritidsfabriken were recommended to turn to Clearwater Sweden for help in making a deal with potential partners. They also contacted other M&A advisory firms, but in the end they chose Clearwater Sweden.
“The advisors at Clearwater Sweden were both the best prepared, and the most likeable, out of everyone we met. They felt extremely competent.”
“We signed a contract in April and worked with them until we signed the deal with our new partner in October”, says Niclas.
Clearwater Sweden created value
After Clearwater Sweden had put together an information memorandum, the company received valuations of well over SEK 500 million from different investors, much more than Pernilla and Niclas had expected.
“Without Clearwater Sweden, we would never have reached a valuation of that level. I think their contribution added an additional 50%, if not double.”
“Their information memorandum also received much positive feedback and generated a lot of interest. We would never have managed to find 18 bidders on our own”, says Pernilla. Clearwater Sweden presented all the bids to Pernilla and Niclas who were asked to choose four favourites. During three intense weeks the couple met with buyer representatives for dinners and presentations in Stockholm.
“For instance, we had very few monthly stock reports, but Clearwater Sweden were very good at extracting the right figures from our system. On top of that, they were readily available, I have emailed them at one in the morning and received a reply. It gives an incredible feeling of reassurance since urgent situations can arise right ahead of a sale. The team at Clearwater Sweden have hardly had time for their own lives these past months, they’ve been working 24/7”, says Niclas.
Turnover in billions next?
When the time had come to decide on a partner, Altor, who for instance helped Helly Hansen break into the U.S. market, was chosen. On the 18th of October, Fritidsfabriken signed with Altor after 13 hours of intense negotiations.
“Altor has a strong presence in the clothing market and the best industry advisors. In addition, they have a long-term plan which is important for us. We have big plans too. Together with Altor we want to launch RevolutionRace in the U.S. and Canada. We want to become a billion kronor company. If we keep doubling our turnover every year, it is feasible”, says Pernilla.
A garage start-up
Launching both a clothes brand and an online shop simultaneously is not a small task. Nevertheless, Pernilla and Niclas managed to do it all by themselves, without outside financing. They started out with a capital of SEK 300,000kr. Almost all of it was spent on manufacturing in China and Vietnam, and marketing. The rest they have done themselves.
“From day one we have designed the clothes ourselves. I’m responsible for the design, Niclas for fit and function.”
“In addition to that, Niclas built our first online shop. We photographed and filmed the content for the website on our terrace, and we did the modelling ourselves”, Pernilla says.
“Sometimes I still model”, Niclas adds. “The first two years we worked from home and in the beginning we were also in charge of logistics. We printed out postage labels at home, packed the orders in Pernilla’s dad’s garage and loaded supermarket trolleys with packages.”
“It was only when the staff at the post office started hiding when we came in that we realised we needed to hire a logistics company. It helped, as we were able to scale up”, says Pernilla.
And upscale they did. Between 2014 and 2017 Fritidsfabriken expanded into Finland, Norway, Denmark and Germany. The turnover increased sharply, from SEK 5.4 million in the fiscal year 2013/14 to SEK 120 million in 2016/17. In the fiscal year 2017/18 the turnover is expected to be SEK 240 million.
Large social media following
The marketing budget of Fritidsfabriken is mainly spent on social media, YouTube content and collaborations with influencers. Even if you have never shopped at Fritidsfabriken, you may well have seen RevolutionRace clothes on your Facebook feed.
Their well-fitting colourful outdoor trousers have become synonymous with the brand.
“People in the industry advised us to go easy on the colours, but we listened to the consumers instead. The same goes for our marketing. We regard our presence in social media as a dialogue between us and the customers, not advertising, and it has served us well. We started with perhaps 300 followers, mainly friends and family, now we have 205,000”, says Pernilla.
On Facebook, the followers can even influence future collections. In September, the followers voted on the colours of the next collection of fleeces.
“We had 1,100 votes in the first hour, it was crazy. The colours autumn leaf, avocado and ocean teal where the winners, they’ll be out next season”, says Pernilla.
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