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Stein Mart Acquisition Grows Tai Lopez Group

24 December 2020 No Comment

Over the last year, Tai Lopez along with business partner Alex Mehr has been snapping up distressed businesses and building a pretty impressive group.

Bringing brands into their vehicle, the Florida-based holding company Retail Ecommerce Ventures (REV), has been building a portfolio of well-matched and complementary companies.

The main philosophy behind their acquisition strategy is to find distressed businesses that have been badly managed and to bring them into the internet era.

As Mehr noted when talking about their earlier purchase of Modell’s earlier in the year “ Modell’s is a well-known and beloved brand in that vertical, by buying Modell’s, the real value we’re paying for is that little bit of trust where people go ‘Yeah, I’ll put my credit card in on that web site because I’ve heard of Modell’s, my Grandpa went there.”

By taking brands with excellent customer loyalty the group has managed to achieve scale very rapidly indeed and looks set to grow even more with this latest buy.

The REV approach – finding good IP

The companies that REV has bought have certain elements in common.

All of the companies have struggled to make headway in the internet age and all save for Franklin Mint and Farmers Cart have been dragged back by expensive retail space leases.

Without exception, every company has a great brand name and very good ratings for customer loyalty and net promoter scores.

And most of them have gone into bankruptcy meaning that the assets are available at less than market rate.

This means that the key requirement for building a good business, the Intellectual property, is already in place but REV have the option of only buying up the good parts of each company and leaving the leases and any crippling debt behind.

And this is the approach that has marked out the Tai Lopez strategy, to buy only the IP and then build on that.

Building a company for the modern age

Of course, buying the parts of a company that you want has its disadvantages.

Although the business isn’t held back by its brick and mortar stores and you don’t have huge staff rosters to pay, what you do need to do is to work out how to operate your new business.

What REV has done is to develop a formula that is designed to work in the internet age.

Unfortunately, the demise of many companies has simply been due to the stubborn hanging on to the old high-street retailer model. As Lopez said earlier in the year “There’s a shift in the world and that shift is from brick and mortar to e-commerce. I’m not sure all the old guard will be able to handle the new world”.

This is where REV has the advantage of the web marketing ability of Lopez and this is evident in the way that the group has developed.

Instead of building a stable of completely separate brands, what REV as done is to allow each to sell across the group websites.

This means that each site, all of which are built using commonly available software, acts more like a platform rather than a simple webshop.

In addition to the mechanics of getting their offer online, the group have also produced a very lean order fulfilment process which uses drop shipping to deliver direct to customers thus reducing the need for warehousing or transport hubs.

The focus is all on giving consumers access to goods from the brands they love in a way that they enjoy and the rebrand of some of REV’s earlier purchases seem to have gone very well indeed.

Dressbarn, a brand that the group bought towards the end of 2019 was reporting 3.5 million unique visitors to its site every month by June and is forecasting to end the year with sales in the region of $65 million.

Current REV brands include;

  • Farmers Cart
  • Dressbarn
  • Modell’s sporting goods
  • Radio Shack
  • Pier 1
  • Linens ‘n things
  • Franklin Mint
  • The book people

Stein mart fits right in

The purchase of 112-year-old Stein Mart falls squarely into the REV custom of seeking distressed brands with a great customer following.

Although the directors blamed the pandemic for the closure of the company, it had been clear for some time that Stein Mart, which operated 300 physical stores, had failed to move with the times and was struggling with online sales.

Reporting a lack of liquidity, the business was already finding it hard to cope with crippling debt and finally moved into Chapter 11 bankruptcy in August.

The REV group won the rights to the intellectual property in a December 2020 bankruptcy auction and is reputed to have agreed to pay $6.02 million for the branding and rights to exclusive clothing labels, domain names, social media assets and customer data.

The attraction is clear. Here is a company with a loyal customer base that has products that are a natural fit for the online model.

Will there be other deals?

Without a doubt, REV is on the acquisition trail and Lopez believes that there is a growing number of companies that are going to fall victim to the twin effects of the pandemic and the changing face of retail.

Lopez has said that he expects to see more opportunities to acquire suitable companies after the holiday break stating that “Retailers are going to look at their holiday numbers, and they’ve got all these leases due,” he said. “There’ll be blood in the streets again, without a doubt.”

For a company with liquid cash that is able to move quickly, there will always be targets and they make an attractive customer for courts that are charged with getting the best deal from liquidated brands that they can.

With the track record that REV is building up, we can expect to see some surprising deals early in the new year.

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