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May 14, 2015 9:01 EDT

Kelly Hoppen London: An on-line business and have positioned high quality, beautiful products as “affordable luxury”

iCrowdNewswire - May 14, 2015

Kelly Hoppen London

Kelly Hoppen London

Kelly Hoppen London sells homewares from award winning designer, Kelly Hoppen. The founders believe that there is a gap in the market for a brand that showcases Kelly’s unique style, for which she has become world famous. The company started trading in early 2014 and sales have grown to over £500,000 in Q1, 2015.



The Idea

Kelly Hoppen London

Kelly Hoppen London is a new company, separate to Kelly’s Interiors business, which we aim to make a market leading homewares brand. We are primarily an on-line business and have positioned our products as “affordable luxury”. We believe there is a gap in the market for a brand that showcases Kelly’s unique style, for which she has become world famous.

All our products are designed and chosen by Kelly and her team and she aims to bring her style and design philosophy to consumers around the world through high quality, beautiful products, at affordable prices, all wonderfully presented on-line or in-store.

Ranges currently include: furniture, bed linen, candles and fragrances, soft furnishings, tableware and Home Jewellery (our term for items such as vases and decorative pieces). 

Kelly’s Background

Kelly Hoppen is a well known designer with a readily identifiable style and is often known as an interior designer to the rich and famous and for her work on prestigious buildings internationally. She typically uses a neutral colour palette and contrasts textures and hard finishes. She is sometimes known as ‘The Queen of Taupe’ and fundamentally believes that creating a sense of calm in one’s home, and a sensual tactile experience, is central to one’s wellbeing.

Kelly is associated with stars from the music industry, TV and film and she has been a Dragon on the critically acclaimed BBC TV series Dragons’ Den (watched in the UK and syndicated around the world). Kelly is honoured to be the recipient of numerous design awards and she was proud to have received an MBE from the Queen for her services to interior design.

Kelly generates substantial media interest with hundreds of mentions in the press each month reaching tens of millions of consumers, TV appearances, and high profile trips around the world including a recent trip to Asia with Prince William and the UKTI as an ambassador for the Britain is GREAT Campaign. Kelly is also an ambassador for the Prince’s Trust.

Investors and Management Team

Apart from Kelly we have 4 other shareholder/directors: John Gardiner (Managing Director), Nick Young (Brand and Marketing Director), Paul Althasen (Non Exec.) and Jamie Robertson (IT Director and General Manager), all of whom have formed start-ups in the past and have grown them before selling and realising shareholder value.

USPs (Unique Selling Points)

  • Established Brand – At the time of launch, in January 2014, 26% of our target market in the UK knew of Kelly, based on a report we commissioned at the time. Since this report we believe Kelly’s recognition will have increased. 
  • Clearly Defined Style – Successful international brands have an identifiable and memorable style together with core products which create a strong brand identity. Kelly has created a look which is recognisable, she has a signature colour, taupe, and she has designed a number of key products such as banded cushions and corals which demonstrate her look. Her style is enduring and, in her interiors business she has many notable private clients as well as corporate clients, for example designing the First Class cabins for British Airways. We also believe that her palette of “perfect neutrals” is likely to compliment many people’s homes.
  • Trend Setting – We intend to continue to position Kelly Hoppen London as a trend setter. We believe that that this will make the brand more distinctive and achieve the best leverage of Kelly as a leading designer. Ultimately this should result in much greater value in the brand.
  • A Gap in the Market – We believe we are well positioned to benefit from the shift we perceive in the market towards “mass-pirational” homewares brands. Kelly’s association with style, her presence on TV and her close links with celebrities supports our view of this. The report we commissioned into Kelly’s recognition within our target market also appears to demonstrate that the younger generation are more inclined to buy Kelly Hoppen products. Brands like Ralph Lauren have moved further into homewares.
  • International Opportunity – New wealth in countries such as China and Russia has created a demand for premium western products. British Companies such as Mulberry, Cath Kidston and Burberry has seen success in these areas of the world. Kelly has undertaken design work in these countries and with c 30% of our website traffic coming from overseas we believe this demonstrates the strength of Kelly’s brand internationally. According to the media, brand, and western brands in particular, are incredibly important to the growing number of more affluent consumers in these markets.

Development of the Business to Date

We started developing the business in early 2013, designing and sourcing an initial range of products. Following the recruitment of key members of the team, and the design and development of the website, we started trading on-line in January 2014. In October ’14 we launched our first trial pop-up stores, primarily as a marketing vehicle, in mid-mall locations in Bluewater and Westfield London. From commenced trading, until the end of February ’15, the business has achieved the following:

  • The website has received circa 1million visits (with over 500k unique visits)
  • Over 8,000 customers have purchased from us – 5,000 on-line and c 3,000 in our pop-up stores
  • Over 30% of on-line customers have purchased more than once which supports our business model based on repeat spend and, we believe, is ahead of industry averages
  • 5 times as many visits to the website now result in a purchase compared to when we launched in January 2014.
  • An average of 9% growth in customers month on month in 2015
  • 30% of website visits are from overseas which supports our belief that Kelly Hoppen is already an international brand (this is without any overseas marketing)
  • Almost 35,000 people signed up to email marketing
  • Trade customers, both in the UK and overseas, are starting to make enquires and buying products. Trade sales is an area we intend to develop.
  • 97% customer satisfaction with product and service. Returns rate is c 5% (with most returned products being put back into stock).
  • Over 280k followers of Kelly Hoppen and kellyhoppen.com on social media
  • Sales for Q1 2015 were over £500,000 compared to £125,000 in Q1 2014.   

Over the next three years, in line with our financial plan, and based upon the actual data we have from our first year of trading, we plan to:

  • Grow awareness of the brand through a range of advertising using digital and non-digital channels – fundamentally we believe that there is a large market who know of Kelly but are not yet aware of Kelly Hoppen London and our product range.
  • Expand and refine our product ranges (all designed and chosen by Kelly and her team) from the current 400 to c 800 lines (with size and colour variations on top of this).  
  • Open strategically placed stores in the UK
  • Sell through selected, brand appropriate, third party retailers (furniture, and a number of other products)
  • Develop our international business leveraging opportunities such as developing our web site for key international markets (using local logistics partners) and selling through retail partners in selected countries (note, we have recently signed such a deal in Asia)
  • Sell through Affiliates and Marketplaces
  • Start building Kelly Hoppen London as a major global brand

Financial Projections and Investment Requirement

The founding shareholders have invested c £2.2m of share capital, and £780k of loan notes, to prove the business model prior to seeking external funding.  Please see the attached legal summary prior to investing to understand shareholder rights and treatment of the loan note. The company has agreed not to use the Crowd funds to repay the loan which must be repaid at 8% interest p.a. before dividends can be considered.

Our three year financial plan shows a small profit in year 2 and a profit of approximately £1.3m in year 3 which will help support the global expansion of the business.

We are looking to raise £1.1m to support this business plan and principally these funds will be used to support marketing activities totalling £1.4m between now and January 2017 (at the point of peak funding). The same amount will be spent on marketing in the following year.

Wider Opportunity

Please note that our business plan, and projected profitability, does not fully take into account the global opportunity of the Kelly Hoppen brand (evidenced by the international visits to our website). If the company achieves a strong following in Asia (similar to Cath Kidston), with the new upper-middle-to-affluent class Chinese wanting Kelly Hoppen products, the scale of the business is likely to be transformed. McKinsey estimates that the size of upper-middle-to-affluent class from 2012 to 2022 will increase 7-fold to $3.5 trillion. Please see attached link below for the full articlehttp://www.mckinsey.com/insights/consumer_and_retail/mapping_chinas_middle_class 

Kelly Hoppen 1

Kelly Hoppen 3

The Market

The entire UK homewares market is estimated by Verdict Research to be worth approximately £11bn and we believe that premium homewares makes up a material part of this market. We have identified a potential customer base in the UK alone of circa 13 million ABC1 residential addresses.

Our projections show that we will build a business with value in the UK but, in addition, an even greater opportunity is likely afforded from the world-wide homewares market. Kelly is involved with interior design projects in many countries for private and commercial clients and also receives press coverage in lots of those countries. Together with 30% of our site visits being from overseas (and c 15% of our sales) we envisage an opportunity to create a world-wide homewares brand. In addition, because we are fundamentally an internet based business where we will always want to provide the best customer experience on-line, we expect to be able take advantage of the global market without significant costs outside of setting up new distribution arrangements.

Competitive Designer Brands

Although there is competition in the premium homewares market our view is that there are relatively few competitive brands which are led by a well known designer and we believe that we are seen as “designer” brand by many of our customers. Our experience is that being a designer brand benefits the business because people wish to buy a well designed and stylish product for their home and the Kelly Hoppen Brand gives them the comfort that they need. Because the customer identifies with the brand, we have found that they want to buy a wide range of products from us for their homes. This is supported by strong figures for repeat purchases we have seen in our trading to date. A small sample of our Feefo customer feedback is shown below:

  • “Superb quality and fantastic designs. I’m hooked on Kelly’s products!”
  • “Fantastic site, wonderful goods and excellent service. Will always go to Kelly Hoppen for home goodies.”
  • “Beautiful object…..as always from Kelly Hoppen”
  • “So, I guess you could say I am a great Kelly Fan.”
  • “I absolutely love Kelly’s products. Amazing quality and very contemporary”
  • “Love love love Kelly Hoppen. Great stuff, brilliant service. Cannot fault them. Will buy again…”
  • “Displaying it as Kelly suggested with white sand and coral. Very classy!”
  • “All very stylish. Suggestions are good for grouping items together.”
  • “Absolutely mad on Kelly’s products in particular the cushions and bedding. Superb quality and design.…”
  • “My shelves have been bare for a good few years due to not being able to find the right accessories for my living room. Since coming across Kelly Hoppen’s website, this is no longer the case. Love the website and love the products. I have already recommended her to friends.”

Competitors in the Premium Homewares Market

Companies in this premium segment include The White Company, Osborne & Little, Designers Guild, Conran, Philippe Starck, Christian Liaigre, Cath Kidston, Habitat, Liberty, Conran Store, Selfridges and John Lewis.

Kelly Hoppen MBE – Creative Director

Kelly is a globally renowned interior designer and has been creating stunning interiors for the homes, yachts and jets of wealthy and famous individuals, as well as commercial clients, for many years Kelly is honoured to have received numerous design awards and in 2009 she was awarded an MBE from the Queen for services to interior design.

Kelly has published eight design books, and in 2011 she presented her own TV series ‘Superior Interiors’ which has been syndicated worldwide. In 2013 she joined BBC2’s ‘Dragon Den’ and makes regular appearances on British TV and radio.

Kelly is an ambassador for the Prince’s Trust and for the Government’s GREAT Britain campaign. 

John Gardiner – Managing Director

John has founded a number of successful companies including: Twinchoice, a distribution company, which he grew to a turnover of £25m+ before merging with Banner Telecom and subsequently selling to European Telecom for £15m in 2000. John then co-founded epay Limited and took it to be the market leader in mobile top-up in the UK, Australia and Malaysia. John sold epay Ltd. to Euronet Worldwide Inc. (NASDAQ: EEFT) in February 2003, for $76m USD.

Paul Althasen – Non-Executive Director

Paul co-founded epay Ltd. and following its sale to Euronet Worldwide Inc. in 2003, he joined the board of Euronet Worldwide Inc. where he still holds a non-executive role.

Prior to this, Paul co-founded MPC Mobile Phone Centre, which he sold to Vodafone in 1997. He is currently a director of Evolve Telecom, Lodwick Homes and holds a number of other UK Directorships.

Nick Young – Brand & Marketing Director

Nick co-founded Lowe Direct, a digital and direct marketing agency in 1996. Within four years Nick grew the business to be one of the top UK Agencies and in 2000 Nick sold the business to IPG. In 2005, Nick launched another Agency called Personal. He sold his interest in this in 2008.

Nick is a Non-Executive Chairman of Suburbia; a luxury brands and high fashion Advertising and Digital Agency whose clients include H+M, LK Bennett, Longchamp, Bennetton, Loewe and Diesel.

Jamie Robertson – IT Director and General Manager

After initially working in banks, such as JPMorgan, Jamie joined epay, shortly after its formation, as Head of IT Projects.. He was later was appointed as a director. Subsequent to epay he undertook consultancy roles at Standard Chartered bank and VocaLink.

The Financials

These notes should be read alongside the Financial Snapshot

1) SALES: Key sales drivers

  • Sales have grown steadily from £125k in Q1 2014 (we started trading on 13th Jan, 2014) to over £500k in Q1 2015.  Future on-line revenues (within our full financial model) are made up from our experience from new and returning customers. Over the next 12 months we forecast to spend over £800k on marketing and through the three year plan the marketing spend is £2.7m. Our model shows that with our current sales run rate of c £1.8m per annum, organic growth, marketing spend, and a few more trace customers, we can potentially achieve the revenues outlined below:
  • April 2015 – March 2016 – £3.6m

          April 2016 – March 2017 – £7.1m

          April 2017 – March 2018 – £9.6m   2) USE OF FUNDS: Outline how you plan to use the funds you raise on Crowdcube?

  • Advertising/Marketing – to fund print and digital advertising/marketing to build brand awareness and drive sales growth
  • The founding shareholders have invested c £2.2m of share capital, and £780k of loan notes, to prove the business model prior to seeking external funding. Our three year financial plan shows a small profit in year 2 and a profit of approximately £1.3m in year 3 which will help support the global expansion of the business.

          We are looking to raise £1.1m to support this business plan and principally these funds will be used to support marketing activities totalling             £1.4m between now and January 2017 (at the point of peak funding). The same amount will be spent on marketing in the following year.

   3) EXPENSES AND PROFITABILITY: Please comment on your expense levels, gross and EBITDA margins

  • Year 1 gross margins are forecast at 60% for online and retail sales (reduced to 50% during sale periods) & 25% for trade sales.  Increased margins in year 2 and 3 to reflect economies of scale, increased purchasing power and better product mix.
  • Investment in marketing will resut in a first year loss however the company is foreecast to become profitable in year two, and wil achieve an EBITDA margin of +14% by year 3.

4) EXISTING DEBT OR EQUITY INVESTMENTS: Please outline the background to any existing debt or equity finance on the company balance sheet

  • Directors Loan of £780k
  • Equity Investments made by Directors totalling £2,211,390 to date

   5) CASH: Cash burn rate, Operational cashflow, when will you need to raise the next round?

  • Ours plans do not show a requirement for a second raise.
  • The Exit Strategy

    Although we believe that we have proven the business model, product, and engagement from customers, we are still at an early stage of promoting and growing the business. We believe the UK market alone offers huge potential but we aim to make Kelly Hoppen London a premium global brand and then the scale of the business is likely to be transformed.

    In Kelly Hoppen London we aim to generate a return for shareholders within circa five years, although we will remain flexible in order to maximise value. If we achieve the path of creating a global brand we may enable the shareholders to achieve a return through a stock market listing, however, there are many suitable acquirers looking to buy brands with a strong international presence.The founders and major shareholders have all formed start-ups in the past and have grown them into substantial businesses before selling and realising shareholder value. These include marketing, retail, telecoms and distribution businesses with multi million pound exits, principally through trade sales. 

    A business such as Cath Kidston is good example of a designer led, affordable yet aspirational brand. Cath Kidston is currently valued at c £250m and the following article briefly describes the development of the business to datehttps://uk.finance.yahoo.com/news/how-cath-kidston-turned-a-%E2%80%98glorified-junk-shop%E2%80%99-into-a-%C2%A3250m-empire-162719959.html. 



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      10% discount on full priced Kelly Hoppen London products

    Share Types

    This company is offering both A and B shares. If you invest £10,000 or more you will receive A-shares which have full voting rights. If you invest less than £10,000 you will receive B-shares which have no voting rights or pre-emption.

    Tax Relief

    Kelly Hoppen London has submitted their plans to raise money, details of their structure and trade etc. to HMRC and has been given advance assurance that the proposed share issue is likely to qualify for Enterprise Investment Scheme (EIS) tax reliefs relating to their shares.

    Tax relief is available to individuals only, who subscribe for shares in an Enterprise Investment Scheme (EIS). Relief is at 30 per cent of the cost of the shares, to be set against the individual’s Income Tax liability for the tax year in which the investment was made.

    If you sell, give away, exchange or otherwise dispose of shares, tax reliefs can reduce your Capital Gains Tax bill. Your shares must meet certain conditions to qualify for these reliefs.

    Please visit the HMRC website for further information on EIS tax relief

    The availability of any tax relief, including EIS and SEIS, depends on the individual circumstances of each investors, and may be subject to change in the future. If you are in any doubt about the availability of any tax reliefs, or the tax treatment of your investment, you should obtain independent tax advice before proceeding with your investment.

    Risk Warning

    Investing in start-ups and early stage businesses involves risks, including illiquidity, lack of dividends, loss of investment and dilution, and it should be done only as part of a diversified portfolio. Crowdcube is targeted exclusively at investors who are sufficiently sophisticated to understand these risks and make their own investment decisions. You will only be able to invest via Crowdcube once you are registered as sufficiently sophisticated.

    Please click here to read the full Risk Warning.

    This page is communicated by Crowdcube Capital Limited and has been approved as a financial promotion by Crowdcube Ventures Limited, which is authorised and regulated by the Financial Conduct Authority. Pitches for investment are not offers to the public and investments can only be made by members of crowdcube.com on the basis of information provided in the pitches by the companies concerned. Crowdcube takes no responsibility for this information or for any recommendations or opinions made by the companies.

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