2xing our $ by Streamlining AKA Brands

🧠 The Takeaways

AKA Brands is teetering on bankruptcy and will probably be taken private this year. Let’s roll out the playbook for the acquisition.

1. Clean up the focus. Sell MNML and Culture Kings.

2. Be where the cool kids are. Sponsor DJ Cafe pop-ups.

3. Attack the Affordable US fashion market while everyone else is Tariff paused.

+  How Technical SEO will help you win AI results.

LBAB! Community - Why you need to invest in Technical SEO again

Everyone's overhyping how AI will change customer shopping. 

More consumers are turning to AI to search for products that they want.

But the real brands winning in AI results today are focusing on technical SEO.

OpenAI's entire data infrastructure + algorithm are built on crawling the open internet.

The foundation = Google's SEO infrastructure.

The best way to rank in AI tools: → Have great SEO → ChatGPT crawls the internet → Picks up your information → Feeds it into their models.

It's hilarious. We're about to swing back to fundamentals.

Metadata. Product structure. Technical SEO basics.

These will be the key to your business crushing it with AI.

What was sexy over a decade ago is sexy again.

The brands that win will be thinking about:

• Structuring product data

• Feeding it into algorithms

• Making their content crawlable

Ex from Coco:

Our AI models are trained on a brand’s Metadata when we connect to their Shopify store. Our sales agent starts training on the product information.

The better the meta data is structured, the faster/better we train our AI model, which means less training the brand needs to do in the prompt window.

We’re looking to build more tools on our AI. It learns about the brand from their website. The better it’s structured, the faster/better we’ll be able to train our AI. That better structured data is how you need to format it for SEO.

Let’s Examine This Biz

Note: As always, none of what follows is legal, tax, investing, financial, or any other sort of advice. And I was never here.

AKA Brands, the COVID DTC rollup for Millennial fast fashion/streetwear brands (Princess Polly, Petal & Pup, MNML, and Culture Kings), is operating on the razor’s edge of their cash position.

• Share price: $12

• Market Cap: $135m

• L5 Performance: -89%

• P/E Ratio: N/A

AKA brands has $27m in cash in the bank but is losing $20m/yr and is in a mountain of debt from opening so many retail locations.

Financial Summary

TLDR Analysis: Good, but not good enough

• Rev +5% while COGS are flat = +9% Gross Margins 👍

• OPEX -12% YoY, but still > GM 👎

• Net Income flipped back into the red. 😰😰

AKA Brands is at the razor’s edge of making the model work. They are almost profitable, kind of growing, and making a lot of smart moves.

But they suffer from the same problems as so many other brands we analyze. Spread too thin to grow faster or be profitable.

And the market is punishing them for it.

Let’s Fix This Biz

Here are my 3 moves to make this biz more aerodynamic and scale faster.

1) Sell MNML & Culture Kings

The greatest question I’ve had (and continue to have with AKA brands) is “What is the repeatable, scalable playbook here?”

Where do all the stars align, and when can you hit the gas?

Every time I look, I see straightforward women’s Fashion brands in Princess Polly + Petal & Pup. 

Then there's MNML, the Streetwear brand, and Culture Kings, the Streetwear Retailer.

In tough moments like these, what's the “back against the wall” playbook you can make in all of them?

• They’re investing more in Princess Polly and physical locations. 

• Petal & Pup could run the same playbook.

• MNML seems like the Runt of the litter

• Culture Kings is the odd man out. 

MNML/Culture Kings aren’t bad bizs, they need different resources + attention.

AKA brands will write off ~30% of their Rev (don’t disclose sales by brand, so it’s my best guess) to do this, but they could sell MNML & Culture Kings for $150m+ and avoid becoming Solo Brands.

Post-sale, they’ll become more aerodynamic. The remaining money, resources, focus, and time will all be plowed into making the women’s brands more successful, which is the real long-term money-maker.

Takeaway: Cut for focus above all.

2) Sponsor DJ Cafe pop ups

All AKA Brands’ sales pitches are “you’re going to look cool, get status, and find a mate in our clothing.” Being cool and aligning the brand with cool people is the whole biz.

They need to align all of their brands with what the “cool kids” are doing. 

Right now, that’s going to see DJs and major artists perform at Cafes.

Creating the outfits, sponsoring events, and being in the know will provide 3 benefits:

1. Cool Brand association with customers who care.

2. Popular/exclusive social content that’ll get more views for cheaper than Meta CPMs.

3. Test markets to know where to open up future retail locations.

The Portco is going into more debt to fuel Princess Polly’s Retail store expansion.

The greatest risk for a retailer is launching a store in a market that doesn’t sell well.

These cooler (lease-less) tests will allow their brands to test and find new markets for new stores while running cool marketing events.

The more successful these pop-ups are in more markets, they’ll provide:

1. Great marketing to sell more products online today.

2. Early awareness + momentum to open stores.

Takeaway: Marketing is the tip of the spear for Sales and Distribution investments.

3) Attack the US Market as the affordable option

This might sound counterintuitive, but AKA should aggressively market themselves as the affordable non-Chinese option. (Even though their products are made in SE Asia.)

They have a massive chance to capture the trade-down economy. 

With consumer confidence at 40-year lows, customers will be looking for more affordable options, and with Shein + Temu becoming more expensive, there’s an interesting moment emerging.

AKA’s brands can become the next generation of affordable fashion and catch the consumers who are trading $100–300 for $50–100 prices.

Express and Forever 21 went bankrupt last year.

There’s a window for DTC brands to replace the affordable, cool kids’ Mall stores. 

They’re in a tough cash position to execute, but if they were a more aerodynamic biz, they could put the jets on while everyone is on pause.

Takeaway: When the market gives you an inch. Take a mile.

Final Thought

I don’t want to play revisionist history here, but if AKA brands didn’t go public in 2021, what would they be doing now? What position would they be in?

If we rewind to early 2021 (9 mos pre-IPO) the portco is:

1. Princess Polly

2. Petal & Pup

3. MNML

They haven’t acquired Culture Kings yet. 

Bizs are booming off the Lockdown surge. 

Money is cheap.

What would we do differently?

1. Plow more capital into existing brands before buying new ones.

2. Acquire more female-focused brands (Fashion Nova + Oh Polly were also growing like crazy).

3. Sit & wait.

#3 is the hardest because we all thought the world was going to change forever, but if AKA Brands hadn’t emptied their war chest (this was another Summit Partners DTC roll-up like Solo Brands), there would have been tons of opportunities to buy great assets for a steal when the market hard corrects in 2022/3.

They did exit at a peak, which is great for their pockets, but if they had played the long game, there were much bigger opportunities for them to double down on the portfolio.

It’s obviously impossible to take this path now, but despite doing a lot of the right things, the brand is down 89% and looks like a take-private bid.