March 3, 2015 / 1:12 AM / in 3 years

Canada's Hardy Capital sees online shoe retailer IPO in 2015

TORONTO (Reuters) - Canadian entrepreneur and venture capitalist Roger Hardy said on Monday he is looking to take an online shoe retailing company public this year to tap investor appetite for e-commerce businesses.

Shoes.com CEO Roger Hardy is seen in this undated handout photo obtained by Reuters March 2, 2015. REUTERS/Shoes.com/Handout via Reuters

Hardy told Reuters by phone that he expects the company, which will be called Shoes.com Technologies Ltd, to record net revenue $250 million in 2015, with the United States contributing about 85 percent.

The company’s revenue was over $200 million in 2014, and its U.S. business is profitable, he said, projecting the firm’s growth at more than 30 percent a year over the next five years.

Though he said it was too early to release details of the potential IPO, Hardy said the company could currently be valued at $500 million to $750 million based on valuation metrics for e-commerce firms. A listing may either be in Toronto or a major U.S. exchange, or both.

“The footwear category is undergoing a tremendous shift. You’re seeing this big migration to online purchases,” Hardy told Reuters. “We’re trying to stay in front of this trend.”

The e-commerce industry, dominated by giants such as Amazon.com Inc (AMZN.O) and eBay Inc (EBAY.O), is highly sought by venture capitalists and investors as more consumers make their purchases online. China’s e-commerce giant Alibaba Group (BABA.N) recorded the world’s biggest IPO at $25 billion last September.

Hardy made a name for himself last year when he sold Coastal Contacts Inc, a digital retailer of eyeglasses and contact lenses, to Essilor International for about C$430 million. Coastal was listed on both the Toronto Stock Exchange and Nasdaq.

With help from his investing vehicle, Vancouver-based Hardy Capital Partners, he has since acquired OnlineShoes.com, which had revenue of $140 million, and Shoes.com, with revenue of $60 million. Those two businesses were merged with ShoeMe.ca, which targets Canadian consumers.

Canada is the fastest-growing region for the company, in part because online retailing in the country is not as mature as the U.S. market. Less than 1 percent of Canadian footwear purchases are made online, compared with 10 percent in the United States, Hardy said.

“Demand from investors is overwhelming. The market is hungry for fast-growing technology businesses,” Hardy said.

Sucharita Mulpuru, an analyst at Forrester Research, expects the U.S. online footwear industry to reach $12 billion in 2015 and show double-digit growth.

“The footwear industry is growing very quickly. The consumer has definitely voted in favor of the category,” Mulpuru said.

Still, some industry experts caution the climate for IPOs this year could be challenging, given higher volatility in equity markets. The competitive retail industry could also pose headwinds, with brick-and-mortar companies pushing aggressively online, they said.

Reporting by John Tilak; Editing by Alan Crosby

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