How Hammitt aims to pocket $25 million from retail clients and investors

For those who think business owners’ stories of highs and lows are just hyperbole, the story of luxury handbag retailer Hammitt is a reality check. Founder (and now Chairman) Tony Drockton and CEO Andrew Forbes had plenty of thrills and spills along the way to the $25 million initial public offering on Regulation A that they are currently navigating a path .

There were setbacks early on – less than a year after the company was founded in 2008, designer Stephanie Hammitt, after whom the brand is named, decided she was ready to move on. thing. Drockton had to more or less start from scratch – difficult in the midst of the global recession that followed the financial crisis.

More recently, the Covid-19 crisis threatened to fatally injure Hammitt – but Drockton and Forbes’ insistence on sticking with their people, along with an appeal to loyal Hammitt fans, has seen them through the pandemic.

Drockton’s talent is to turn crisis into opportunity. “When Stephanie retired, I found myself in the luxury fashion business with no experience, just as the recession was starting to bite,” he recalls. “But maybe it was a gift – I had no preconceptions, and it was an opportunity to build a really strong foundation for the business.”

With limited resources at his disposal, Drockton had to build the Hammitt brand in his own way. “I could see there was a real opportunity to bridge the gap between European luxury handbag brands and what was available in the US,” he says. “But it wasn’t easy – everyone told me that to become a luxury brand we had to advertise in Vogue, get celebrity endorsements and sell in big stores, but we didn’t. We didn’t have those kinds of resources.”

Instead, Drockton focused on deals with smaller stores, at least in the early years. He also set out to create a passion-based narrative for the Hammit brand. “I kept telling our story – it was about converting one customer at a time,” he says. “We design for quality, not price – and that sense of inspiration permeates the entire company.”

Part of the vision was a determination not to compromise – certainly not on the quality of Hammitt bags, but not on price either. Although Drockton was often asked to cut or kick sales, he resisted the temptation, believing it would devalue the brand. “You just have to draw a line in the sand,” he insists.

Slowly but surely this approach began to pay off, with Hammitt building up a base of loyal customers who loved the company’s designs and appreciated its old-fashioned commitment to service – it promises free repairs for life, for example. “We looked at a Californian approach that I thought brought something different to the luxury market,” Drockton says of the Los Angeles-based company.

Less than a decade after its launch, Hammitt was an established brand, with hundreds of wholesale partners and growing adoption in the direct-to-consumer market. Then, in 2020, the pandemic arrived. “Our wholesale partners, who generated 75% of our revenue versus 25% online, all had to shut down,” recalls Forbes, who had assumed the role of CEO two years earlier. “We had to figure out very quickly how we could change that ratio.”

Drockton and Forbes have made a decision. “All the other CEOs were sending people home, but it didn’t seem fair,” Drockton says. Instead, the couple waived their own salaries and kept staff on the job. “We also appealed to our customers: we said ‘if you can afford it, we need you’, and we were overwhelmed with the response.”

It was a lesson the company took to heart. “If you want to get through a crisis, the only way to do it is with other people,” Forbes says. “People never forget it if you cast them aside.” This goes for staff and customers, the company believes.

Fast forward three years, and Hammitt has survived — and thrived — to tell the tale. Since 2018, brand revenue has grown nearly 30% annually, with growth expected to reach 60% in 2021, and e-commerce is booming – the direct-to-consumer channel has grown by nearly 100% per year.

This success gave Drockton and Forbes the confidence to plan an IPO for the company – and, generally, they decided to do it their own way. Last year, the company announced a public offering of its stock under the Securities and Exchange Commission’s Regulation A rules. These allow retail investors in the United States – and beyond – to participate in listing alongside the institutions to which such issuances are normally limited.

“We’ve always been a company where our customers could talk to the CEO and president, so this more inclusive approach just felt right,” says Forbes. “We knew we needed to raise capital, like any growing business, but we thought long and hard about how best to do it. In the end, we decided to reach out to our customers.

Not that Hammitt’s $25 million fundraiser is limited to those who buy his bags — it’s an entirely public list. But Drockton and Forbes think Hammitt fans are likely to be frontrunners for the company’s stock – they’ve already noticed that 80% of investors subscribing for shares are women.

Drockton sees the Regulation A listing as part of Hammitt’s ongoing history — the company may return to this path for future fundraising exercises. “It’s a long-term relationship that we build with investors, like the one we have with our clients,” he says.

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