Why Retail Just Became Hot Again

September 19, 2018 - By: Baystreet Staff


Apple recently became a $1 trillion company, truly a titan of the modern age.

Shares of the tech giant have surged since July 31st, when the company beat earnings expectations. By far the most valuable publicly-traded company in the United States, Apple enjoys unrivaled supremacy with its 13-figure valuation.

You might think of Apple as a technology company, but it’s also a major retail player. Their 272 U.S. Apple Store locations are the most valuable retail space on Earth. They earned $5,500 on average per square foot in 2017.

As Apple passes one of the greatest milestones in corporate history, it is also giving a tiny company a taste of its hugely profitable real estate segment. Cool Holdings (NASDAQ:AWSM) - a $29.3 million company – has its hands on the opportunity of a lifetime.

Now there’s a new type of Apple store coming to neighborhoods across America. It looks, smells, and feels like an Apple store. It’s a unique real estate play, potentially worth $900 million per year. They even earn an “Apple-like” $3,750 per square foot.

But this is something entirely different.

In the next couple of years, hundreds of these new stores may start popping up all over the United States. But they aren’t owned or operated by Apple.

No, these stores are owned by Cool Holdings (NASDAQ:AWSM).

The company already owns stores in South Florida and Latin America. Now they plan to roll out 200 boutique stores by 2020 - in what just might be one of the greatest real estate plays of the 21st century.

And, most investors are barely paying attention.

Here Are 5 Reasons To Follow AWSM Now:

1) The Real Estate Play Of The Century
2) $3,750 Per Square Foot In Revenue
3) Apple’s $900 Million “Gift”
4) Dozens Of Luxury Brand Partners
5) Apple Experience In Their C-Suite

Reason #1: The Real Estate Play Of The Century

This just might be the biggest opportunity in real estate since Peter Minuit bought the island of Manhattan for $24 worth of beads. And, it’s happening in retail.

Yes - retail.

Cool Holdings (NASDAQ:AWSM) – has the potential to turn every square foot of retail space into $3,750 per year.

The company is planning 200 stores in the U.S. by 2020. With an average size of 1,200 square feet, that’s a revenue stream worth $900 million.

That is a staggering figure given that the company has a market capitalization of just $28.4 million today.

Now you might be thinking: isn’t retail dead? It’s true - big-box stores are struggling in an e-commerce world. Circuit City, Sports Authority and Radio Shack are already bankrupt. Even profitable retailers like Wal-Mart and Target only earn between $200 and $400 per square foot.

All of those facts miss the significantly more lucrative picture.

Even while “commodity retail” is dying the death of a thousand cuts - luxury brand retailers are experiencing an unexpected “golden age” of exploding revenues.

Here is just a small sampling of a few companies posting lucrative margins on their real estate:

- Kate Spade earns $1,580 per square foot.

- LuluLemon Athletica earns $1,670 per square foot.

- Michael Kors earns $1,870 per square foot.

- Tiffany & CO earns as much as $3,043 per square foot.

But that pales in comparison to what we are talking about. Cool Holdings (NASDAQ:AWSM) - One Click line of Apple co-branded stores earns $3,750 per square foot.

That’s right: a tiny, $28.4 million company that you’ve likely never heard of might earn more per square foot than some of the most lucrative retail brands in the world.

Reason #2: Earning $3,750 Of Revenue Per Square Foot, Second Only To Their Partner Apple

Apple’s products have dominated virtually every category they enter - iPhones, iPads, and Apple computers are ubiquitous worldwide.

The same is true of their brick and mortar storefronts. The Apple Stores are an iconic tentpole of their brand. They’re also a major profit center. There are 501 locations worldwide, with 272 in the United States.

Those stores are money-machines, and earn the highest revenues of any retailer on Earth - at more than $5,500 per square foot in 2017.

But, Apple needs to concentrate on its core business. Cool Holdings (NASDAQ:AWSM) has secured reseller licenses for most of Apple’s world beating products - from the iPhone X to the iPad to Apple laptops and desktop computers.

These are hugely successful, highly profitable brands. In 2017, the iPhone X (which is priced at $1,000) helped drive iPhone sales up 14%, to $38 billion.

Now Cool Holdings can sell all of them at their OneClick branded stores.

These locations are similar to the Apple Store in many ways. And just like Apple, they have incredible earning potential - at a staggering $3,750 per square foot. For reference - the average retail rent was $241.08 per square foot across the 80 largest metropolitan regions in the United States in 2016, according to REIS.

That’s an astounding amount of leverage.

Cool Holdings hopes to become Apples largest APR (Apple Premier Reseller), retailer in the Americas including Canada, USA and Latin America.

Reason #3: This Could Be A $900 Million Real Estate Play In Phase 1 Alone

Nobody comes close to replicating Apple’s profits or its sales. Cool Holdings (NASDAQ:AWSM) hopes to simply enjoy some of that same growth - aiming to become the world’s largest reseller of Apple products and services.

To do that, they will pioneer a vertically integrated sales model, one that, for the first time, puts distribution, retail and marketing all under one roof. For Cool Holdings and their OneClick stores, it’s all about “one world, one store, one click.”

Most consumer technology retailers aren’t vertically integrated. If a manufacturer sells a product wholesale for $30, the distributor will flip it on to retailers at $65 - slicing margins at the B2C level right to the bone.

Cool Holdings - on the other hand - owns its own distribution.

Thanks to this model, the company can earn more than other licensed Apple resellers. It believes that it can hit a 6-8% EBITDA rather than the more normal 2-3%.

Marketing plays a key role in their strategy as well. The company has created a full-fledged in-house marketing agency divided into “Build” and “Run”. Build takes care of organic growth and construction of new stores according to Apple standards, and Run takes care of the marketing operation of the stores and the distributor.

The Run division has a value add where for every dollar it gets for marketing, it is tasked with producing a 30% profit margin - contributing to the company’s EBITDA.

They’ve already begun to conquer the Latin American market with 15 locations, and now they’ve got their sights set on the United States.

Now, Cool Holdings (NASDAQ:AWSM) plans to roll out 200 boutique stores by 2020. The stores will tap into undiscovered or underutilized markets all across the country. At $3,750 of revenue per square foot, and with an average size of 1,200 square feet - that’s a projected revenue stream worth $900 million in Phase 1 alone.

The company has the experience, the support and the money to pull this off. It recently raised $3.7 million in new capital, and it has the full support of Apple Inc.

Reason #4: Dozens Of Luxury Consumer Tech Brand Opportunities - Potentially Worth Millions

While Apple products represent the core of Cool Holdings (NASDAQ:AWSM) brand portfolio, the company is free to sell a range of high tech products.

As an Apple Retailer the company reaps all the benefits of having their stores tied to the biggest and most remarkable brand in the world. Yet it could also unlock lucrative distribution and retail opportunities with third party accessory brands affiliated with Apple products - potentially worth millions.

From Bose to Sonos, Moshi to Kanex, these are all brands that benefit from Apple’s halo effect - with highly complementary product offerings.

Bose is a case in point. The headphone and speaker company nearly cracked Forbes’ Top 100 last year, earning $3.8 billion in revenue. Other brands like Speck, Belkin, Braven and SanDisk represent the next wave of consumer electronics.

And the best part? They all fit One Click’s brand identity. As the Apple brand continues to soar, these companies win over new customers, expand their market share - and watch revenues explode.

Consumer focused. High technology. High ticket. High margin.

This wide range of potentially accessible brands may give Cool Holdings (NASDAQ:AWSM) the chance to sell more than just Apple products, and realize even more revenue. And, the company already has deals with dozens of them.

Reason #5: Apple Experience Is Embedded In Their Executive DNA

Cool Holdings (NASADQ:AWSM) is led by a team of executives with years of experience in both high end consumer technology and retail sales.

Better yet, they’ve got experience with Apple and other major consumer electronic companies, which makes the relationship with Apple brands and products a no-brainer:

- CMO Felipe Rezk worked as Head of Enterprise Sales at Apple.

- CEO Mauricio Diaz has nearly twenty years in consumer electronics, first with Panasonic and Samsung, before branching off to form Cool Tech in 2014.

In 2016, Diaz engineered a merger between Cool Tech and InfoSonics, forming the company that would become Cool Holdings (NASDAQ:AWSM).

According to Diaz, Apple is expanding into North and South American markets, “and we are working with Apple to be an integral part of that expansion.” With Apple’s help, Diaz and the rest of the team at Cool Holdings plans to expand both organically and through acquisitions, until it reaches 200 new U.S. locations.

Before you know it, OneClick branded stores owned by Cool Holdings may be ubiquitous - potentially with vast revenue per location.

Why Investors Need To Pay Attention Today

This opportunity could be an investment unicorn.

With their deal in place, Cool Holdings (NASDAQ:AWSM) is earning an estimated $3,750 per square foot at their One Click store locations. They already have 15 in Latin America. The company has a unique vertically integrated business model. Unlike its competitors - who earn 2-3% EBITDA - they’re expecting closer to 6-8%.

Now they’re looking to capitalize on that edge, with a 200-store U.S. expansion. Those stores will average 1,200 square feet, for potentially $900 million in revenue. And, they’re well capitalized to begin the rollout.

On June 6, 2018 Cool Holdings (NASDAQ:AWSM) - announced it had closed a public offering - raising approximately $3.7 million in fresh capital.

Right now, the stock is trading at a $28.4 million market cap. But if they execute as planned – targeting a $900 million opportunity – that valuation could change in the near future.

Other companies looking to take the tech world by storm:

Shopify Inc (TSX:SHOP) is a Canadian e-commerce company. More than 500,000 companies rely on Shopify’s real-time e-commerce, including Tesla, Budweiser and Red Bull, among many others.

Recently, Shopify reported its second-quarter financial reports, with an impressive year over year growth of 62 percent. It also outlined its three primary growth initiatives, one of the biggest being its transition of merchant data from its own platform to a cloud-based platform.

In addition to its technological leap, it is looking to expand into more markets. Though the company boasts merchants in 175 different nations, Shopify’s merchants are primarily U.S. based – something the company is eager to change.

Blackberry Ltd (TSX:BB) This well-known cell-phone pioneer is engaged in the sale of smartphones and enterprise software and services. The Company's products and services include Enterprise Solutions and Services, Devices, BlackBerry Technology Solutions and Messaging.

Blackberry used to be a worldwide leader in phones, but Apple, Google and other Android manufacturers have rapidly acquired market share. Blackberry has since focused on software and is now developing systems for enterprise. Tech giants such as Apple and Google won’t be able to repeat Blackbery’s success in this sector that easily.

Blackberry’s enterprise ambitions are largely focused on its new “Enterprise-of-things” platform called Blackberry Spark. In its latest announcement, Blackberry highlighted the significant growth of its new ecosystem, its global network of value-added integrators, and a brand new partnership with AWS.

Celestica Inc. (TSX:CLS) is a manufacturer of electrical devices used in IT, telecommunications, healthcare, defense and aerospace industries. The company has seen strong growth YoY which we expect to continue as the sales expectations are almost 3% better than last year’s.

In its second-quarter earnings report, Celestica reported a 9 percent year over year growth in revenue, attributing a lot of its momentum to the proliferation of its semiconductor business.

The company also announced positive earnings from its recently restructured ATS branch, with a 16 percent increase in revenue compared to the year prior.

Computer Modelling Group (TSX:CMG) is a software technology company producing reservoir simulation software for critical infrastructure. Computer Modeling Group LTD. Is a tempting trade for investors as it brings together two essential industries - tech and resources- which are going anywhere any time soon. Especially as the need for security grows, a tech company involved in the oil and gas industry has an incredible opportunity to offer other services.

While Computer Modelling Group focuses on the resource industry, its technology is definitely breaking ground. Founded nearly 40 years ago by Khalid Aziz, a renowned simulation developer, the company has proven that it has staying power.

Last month, Computer Modelling Group announced a generous dividend for investors in the company’s stock despite a 12 percent decrease in total revenue.

Kinaxis Inc (TSX:KXS) is a provider of cloud-based subscription software for supply chain operations. The Company offers RapidResponse as a collection of cloud-based configurable applications. The Company's RapidResponse product provides supply chain planning and analytics capabilities that create the foundation for managing multiple, interconnected supply chain management processes, including demand planning, supply planning, inventory management, order fulfillment and capacity planning.

Recently, BASF, the German chemical giant announced a successful pilot with Kinaxis, boosting supply chain visibility and “proactive intelligent control” of its supply chain which could be amount to a huge step forward for Kinaxis.

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