Cool Holdings, Inc. (NASDAQ: AWSM) is a Miami-based company focused on premium retail brands. It is currently comprised of OneClick®, a chain of retail stores and an authorized reseller under the Apple® Premier Partner, APR (Apple® Premium Reseller) and AAR MB (Apple® Authorized Reseller Mono-Brand) programs; Cooltech Distribution, an authorized distributor to the OneClick® stores and other resellers of Apple® products and other high-profile consumer electronic brands; and verykool®, a brand of wireless handsets, tablets and related products the Company sells to carriers, distributors and retailers in Latin America.
The company’ business and marketing profile leverage on:
- Its rapidly growing presence in the Apple products distribution business in South America
- Extensive network of stores and no significant revenue concentration
- Its Revenue diversification is likely to improve further over the medium term with plans to open more stores in different geographies
- Its Healthy relationship with principals – Strong relationship with vendors, has enabled it to deal directly with brands, compared to other retailers who interact through distributors. This has ensured robust marketing and incentive support from suppliers.
- It’s Prudent risk management policies and efficient working capital management.
Growing market and operational profile: The company currently operate a total of seventeen (17) OneClick stores, consisting of six (6) in Argentina, seven (7) in the Dominican Republic and four (4) in Florida. Cool Holdings goal in the next three (3) years is to significantly expand its network of OneClick stores to 200 locations in Latin America, the U.S. and Canada to become one of Apple’s largest retail partners. Management expects that its growth will come from a combination of organic expansion on a store-by-store basis, as well as external acquisitions.
Ongoing Expansion Strategies: During the recent past, AWSM continues to execute its expansion and diversified strategies successfully. It recently announced plans to continue the expansion of both its Apple® Boutique stores under the OneClick® brand and its Cooltech Distribution business. Over the course of the last year, the Company has acquired or opened 4 OneClick® stores in Florida, six stores in Argentina and seven stores in the Dominican Republic.
Felipe Rezk, Chief Sales and Marketing Officer of Cool Holdings, Inc. stated: “We plan to grow our OneClick® footprint through a combination of both organic growth with the development and construction of our own stores and acquisition of strategic Apple® retailers across the Americas. Our plan is to aggressively grow our store footprint from 17 stores today to approximately 200 stores by 2021, provided we can arrange the proper funding. Contemporaneously, we plan to grow sales at our Cooltech Distribution unit. Cooltech Distribution serves as both an internal supply partner to all our OneClick® stores, as well as a supplier to other Apple® and big box retailers. Cooltech maintains direct sourcing relationships with accessory manufacturers such as Bose, Belkin, Clik, EVE, JBL, Klipsch, Moshi, Sonos, Speck, Tech 21, Thule, Transcend and Zagg-Mophie, amongst others. Growing both our retail footprint and our distribution business will enable us to leverage our resources, grow sales and increase profitability.”
The company’ goal and strategies over the near to medium term:
- Cool Holdings strategy is to focus its investments on premium retail brands that have the immense potential for accelerated profitable growth which can ultimately translate into attractive returns for all the stakeholders. Cool Holdings investments may be deployed through stock or asset acquisitions of an entire entity, or via majority or minority interests depending on the opportunity.
- The company’ goal is to make available to its customers the latest Apple products as soon as they are announced, both in its OneClick® stores and online, Furthermore, the company is also committed to offering the latest accessories for the new iPhones, including cases, cables, adapters, speakers and external batteries, among others.
Also, the company’ business, operational and market profile leverages on its strong management team. The company’ managements visible and aggressive strategies have placed the company on a rapid growth trajectory to become a name to reckon with.
About the company:
- Currently, Cool Holdings is a retailer and wholesaler of consumer electronics focused on the operation and expansion of its OneClick® retail stores in the United States, Latin America, and Canada.
- As an Apple Premier Partner, AWSM work with Apple to develop its network of OneClick stores in locations and markets where Apple has limited or no presence. In its stores, AWSM sells all Apple and Apple-approved products and accessories, including accessories that it sources from independent third parties.
- The company also provide repair service for Apple products and are one of the select authorized third-parties that Apple entrusts with its proprietary machines used torepair or replace damaged iPhone screens. Retail customers may book a repair appointment at one of the OneClick stores directly through the Apple website.
Extensive Product range: Cooltech Distribution unit distributes various consumer electronics to resellers, retailers and small and medium-sized businesses in Latin America and the United States. Cool Holdings market and distribute a variety of mobility, computing, audio/video, and other technology products including laptops, tablets, cell phones, drones, smart watches, gaming consoles, accessories, and audio devices. In addition to Cool Holdings direct relationship with Apple, the company has direct relationships with top third-party brands in the Apple retail echo-system including Bose, Belkin, Speck, Tech21, and Thule, among others.
- Revenue: For the three months ended September 30, 2018, the net sales amounted to $7,137,000, an increase of $4,623,000, or 184%, from $2,514,000 in the same period last year. Sales generated during the quarter by Cool Holdings OneClick stores in Argentina and the U.S., that it acquired on October 1, 2017, as well as sales of its OneClick stores in the Dominican Republic that it acquired on August 17, 2018, amounted to approximately $3.7 million in incremental sales compared to the prior year period. Sales of verykool products, post its March 12, 2018 merger with InfoSonics, amounted to approximately $1.7 million during the quarter. Distribution sales during the quarter declined approximately $0.8 million compared to the same period last year.
- Profitability: For the three months ended September 30, 2018, Cool Holdings gross profit amounted to $1,090,000, an increase of $840,000, or 336%, from $250,000 in the same period last year. The company’ gross profit margin for the three months ended September 30, 2018, was 15.2%, a significant improvement from 9.9% in the same period last year.
- Liquidity and financial flexibility During the quarter ended June 30, 2018, the company raised $3.6 million in a sale of stock. In the quarter ended September 30, 2018, it converted a total of $12.4 million of debt and other obligations into stock. In October 2018, the company raised an additional $4.0 million in a convertible debt offering, and it may make other debt or equity offerings in the future.
Key risk factors and potential stock drivers:
- Cool Holdings OneClick business is highly dependent on a single supplier, and a loss of that supplier or deterioration of its relationship with them could significantly reduce its sales and profitability and jeopardize the business model
- Cool Holdings business suffers from derived demand, and it depends on the timely delivery of new and innovative products from its vendors/brand owners
- Exposure to intense competition leading to constrained profitability
- Company’s ability to maintain its liquidity and financial flexibility to fund its incremental capital requirements.
- On Wednesday, March 6th, 2019, AWSM was at $4.39 on volume of 1.1M shares exchanging hands. Market capitalization is $31.405 million. The current RSI is 79.26
- In the past 52 weeks, shares of AWSM have traded as low as $1.15 and as high as $22.61
- At $4.39, shares of AWSM are trading above its 50-day moving average (MA) at $2.30 and above its 200-day moving average (MA) at $3.95
- The present support and resistance levels for the stock are at $3.03 & $5.15 respectively.
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