Peekaboo Beans (TSXV:BEAN): An Undervalued Growth Story?

    Peekaboo Beans Inc. (TSXV:BEAN) reported a 14% jump in revenues year over year in its second quarter along with a 48% growth in stylist recruitment

    Vasudha Sharma | July 23, 2018 | SmallCapPower: Traci Costa, founder and CEO of the direct-selling children’s apparel brand Peekaboo Beans Inc. (TSXV:BEAN) (OTCQB:PBBSF), is on a mission beyond just the business of promoting play and healthy lifestyles for the next generation of children. It is building shareholder value.

    “We are on a clear pathway to growing revenue in a market 10 times the size our current market of Canada, where we do about $3M a year in sales.” stresses Ms. Costa.

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    Peekaboo Beans manufactures stylish ‘playwear’ for children in custom fabrics and thoughtful designs to encourage children to explore active-play, exercise their social skills and discover the outdoors. A brand that meets the standards of Prime Minister Justin Trudeau and kids to wear on Canada’s 150th Birthday last year. 

    A Direct Sales Model Built Around Children’s Play

    “Our long-term vision is to become an international brand,” says Peekaboo Beans Inc. (TSXV:BEAN) CEO Traci Costa, “but for investors, that means an early-stage opportunity with a proven track record of growing revenue in Canada, with early proven success in the United States, a market 10 times the size.”

    “Our key performance indicators are substantially higher than other direct-sales companies. But it’s this culture that we have created around a healthy lifestyle for children that is the golden opportunity of brand recognition, brand loyalty and retention for us,” exclaims Ms. Costa.

    Business is Booming at Beans

    As a business, Peekaboo Beans is rapidly expanding today. Since its soft launch in the U.S. in September 2017, the Canadian brand is now present in 34 states in the country. The Company reported a 14% jump in revenues year over year in its second quarter along with a 48% growth in stylist recruitment. A significant chunk of its Q2 sales have come in from the U.S. market, prompting the Company to get listed on the U.S. venture market, the OTCQB.

    “We understand that the U.S. is where our eye is set. We realize that Canada has been a good jumping-off point for us and a good testing ground. But we know that with this business the opportunity for growth is going to be in the U.S. It is a $36 billion industry in the U.S. So, we want to bring more exposure for investors on the U.S. side,” says Ms. Costa.

    The introduction of a $49 enrollment kit called ‘Petite Boutique in a Box’ as a low-cost entry point for potential customers helped accelerate stylist recruitment in the U.S. The Company is now working on launching a motivational compensation plan and integrating its Canadian and U.S. software platforms for stylist support.

    Another smart product that bumped up its margins this year is Underbeans, their undergarment line for children. A grab-and-go product with a low price point for customers on a budget. We increased our average order size by 25% because of Underbeans. We sold over 3000 pairs in a month a half. They are sensory friendly, hand-blend organic cotton,” says Ms. Costa.

    A new manufacturing partner is also allowing Peekaboo Beans to decrease its cost of goods and broaden its product-mix. So, more grab-and-go offerings and new clothing categories for children are in the offing. Supporting these near-term goals and the U.S. expansion is the $2.2 million it raised in February 2018 as part of an oversubscribed private placement.

    Empowering Women with Entrepreneurial Opportunity to Leverage Company Growth

    Traci Costa is equally passionate about the social impact that the direct-sales model of her Company has had on countless women and families. Peekaboo Beans is sold through a direct-sales network of ‘Play Stylists’, or independent sales representatives. The Company trains women to become entrepreneurs and build their own business as a direct-seller of Peekaboo Beans’ merchandise. They earn their income on their own terms and on their own time.

    “We are in an economy where people are finding other ways to supplement their income. The millennial mother, in particular, is educated and coming out of university with extreme amounts of debt. She is building a career, having children and then not being able to afford or pay a student loan or pay for expensive day care. One in seven households has a direct sales business. I believe that it is going to increase from that as people will be taking on more opportunities for solo entrepreneurship,” believes Ms. Costa.

    An Undervalued Growth Story?

    Peekaboo Beans management has set itself a target of generating $20 million in sales by the year 2022. With their foray into the U.S. and improved manufacturing costs, the Company appears well positioned for growth and improved margins over the next 12 to 24 months.

    Read: Ubika Research Says Peekaboo Beans (TSXV:BEAN) Has Strong Revenue Ramp Up, Margin Expansion in the U.S.

    “If you compare us to other retail brands who are public, we are very undervalued. Yes, we are earlier, but we have taken a lot of the risk out of the business by having our foundation built. We have a proven product and an established distribution infrastructure. We have capital investors and we have cash,” says Traci Costa.

    As traditional retail gets downsized and consumers seek engagement beyond e-commerce, the market for direct-selling thrives. The children’s apparel industry in the U.S. alone is a $30 billion space. And the direct selling space in the U.S. has a potential of $36 billion. According to Peekaboo Beans, even 1% of this market opportunity means massive growth for the Company.

    For investors, Peekaboo Beans has an attractive risk/reward profile given its strong fundamentals. The Company is in a niche space with a niche product and is a market-disruptor in a world that craves connections. As long as it maintains its liquidity and achieves its strategic goals, Peekaboo Beans will be poised for success.

    To find out more about Peekaboo Beans Inc. (TSXV:BEAN), please visit the company’s Investor Hub.

    Hear directly from Investor Relations at Peekaboo Beans Inc. (TSXV:BEAN)
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