However, so far, it is off to a more sluggish start. Its' 8.25 million ADS IPO priced at $18, the low end of the $18-$20 projected range, raising about $148.5 million in proceeds. The underwriters involved in the deal are solid, including Goldman Sachs, JP Morgan, Jefferies, and Allen & Co.
As mentioned above, NETS is an online retailer. But, it actually started out as a brick-and-mortar store in 2000. In 2014, the company launched Zattini, an online fashion store, which now also offers beauty products. The company also operates in Argentina and Mexico with an expressed goal of becoming the leading online consumer platform in Latin America.
The company has 18 million registered members and 5.6 million active customers. In 2016, the customer base grew 22% and more than ten million orders were invoiced with 74% of orders coming from repeat customers. The company optimizes its site for mobile users, who made up 46% of total visitors and 32% of total orders in 2016 (up from 20% in 2015). This compares favorably to the overall Brazilian eCommerce market, where 11.7% of orders came from mobile devices in 2015.
In its inventory, the company has over 190,000 stock keeping units from more than 500 brands, including Adidas, Nike, Mizuno, Tommy Hilfiger, Ralph Lauren, and Lacoste, among others. The company has started developing private label brands to supplement its range of offerings.|
Netshoes believes its solid infrastructure network is largely responsible for overall growth. The company specializes in easy-to-ship items with high margins and short replacement cycles. An automated packing, picking, and inventory management system has helped ship over one million orders per month with processing times as short as six hours. The company estimates 97% of orders are delivered on time.
Taking a look at the financials, in 2016, net sales totaled BRL1.74 billion, up 15.5% year-over-year. The company recorded an operating loss of BRL72.71 million and a pro forma loss per share of BRL6.51. This was worse than the company’s 2015 pro forma loss per share of BRL4.30, but ahead of its 2014 pro forma loss per share of BRL6.90.
The company’s Brazilian operation began generating positive cash flow from operations in 2014 and positive earnings before interest, tax, depreciation, and amortization in 2015. However, the overall business has a negative cash flow. In 2016, the company used BRL20.86 million for operating activities, down from BRL23.09 million used in 2015 and BRL27.27 million used in 2014.
NETS ended 2016 with BRL387.38 million in long term debt.