Direct-to-consumer footwear brand Rothy’s just recorded its best year after the company Jenny Ming, one of the old Navy co-founders, appointed as CEO.
Ming took over Flats Maker from co-founder Stephen Hawthornthwaite in January 2024. Under her guidance, the company’s sales rose 17% last year to $211 million, the best sales since its launch a decade ago.
Comparable sales in its stores increased by 20%, and over 10% of EBITDA positives throughout the year.
According to Carriage, Rossi outperformed the U.S. footwear market, which was flat in 2024 compared to 2023.
Rothy’s growth comes from expanding to wholesale and focus on brick-and-mortar stores, discovering it with direct-to-consumer darlings Harder than ever Survive with pure game models Once amazed by investors At the turn of ten years.
Once in mind the future of the industry, these online-only businesses are now leaning towards retail fundamentals that have long been the foundation of emerging brands. Wholesale partnerships are a key customer acquisition tool, and The store is still important.
These magnificent startups Meeting challenges It’s an online business only, and the winners are adapting to a new reality where stores, wholesale partnerships and e-commerce all need to be involved to ensure they can be profitable.
“A lot of people like it, why are you going to Amazon? Because people do a lot of searches on Amazon. If we’re not there, they typed Rothy’s, competitors or someone else would show up. So why is that “we want to be there?” Ming told CNBC in an interview. “For me, it really thinks overall and broadly. What our customers want from us is how we get close to it…people shop today is different. ”
Channel diversification will never become a panacea for businesses that are inherently damaged or do not meet market demand. The footwear industry and specialty retail are generally more competitive than ever, and Rothy needs to continue working to diversify, expand and expand into new categories to maintain its performance.
Shortly after Rothy launched in 2016, it quickly named itself with its ubiquitous Instagram and Facebook ads and innovative approaches to Facebook ads and sustainable shoe making, including the use of recycled plastics to make machine-washable products. By 2019, it’s Meghan Markle’s first choice, and it’s already developed Followers.
Brazilian footwear company Alpargatas, who suffered a record valuation and 0% interest rate growth, acquired 49.9% of Rothy’s in 2021, resulting in a post-investment valuation of $1 billion.
Rothy used the investment to build a store fleet, but by then the company’s growth had stalled and was struggling to reach profitability.
“Once we get out of the pandemic, you can see a lot of these digital local brands now say, OK, now, right? I need a store. Getting customers online is so expensive,” said Dayna Quanbeck. president. “(Using) the e-commerce model…all your expenses are variable, right? Where do you really find scale, and you really find profitability is where you can take advantage of a fixed cost, which is the store, which is actually Wholesale.”
Ming served as the old naval president from 1996 to 2006 and later became CEO of Charlotte Russe, who joined Rothy’s board in 2022 and was later asked to Take over as CEO. She didn’t say it at first, but later agreed to take charge after she spent months in consultation and saw the early situation of transformation begin to form. She immediately began to focus on increasing profitability and by ensuring that Rothy sells the type of product its customers want, as well as where they shop.
“I literally line up … look at what we should spend, what we shouldn’t, and the right size marketing spend. Some things are, you know, we don’t need it.” Plants were the first piece she cut thing. “But the most important thing is that driving profitability is really revenue. You have to be adding sales to be really profitable, right?”
This is the arrival of Rothy’s new sales strategy. In 2024, it began testing with many wholesale partners (Anthopologie, Bloomingdale’s). Amazon By the end of the year, Nordstrom.
Meanwhile, it continues to increase its store fleet. Now, one has attracted about 99% of its revenue from its website, accounting for about 70% of online sales, and the balance between the rest of the stores and wholesalers. Combining profitable stores with strong wholesale partnerships, Rothy’s is able to grow sales while becoming more profitable.
“If we were always digital natives, you really can’t get there at the acquisition cost and the cost of these days is just coming,” Quanbeck said. “It’s not possible to be honest.”
Looking ahead, Rothy’s plans to build on its wholesale partnership and to bring the store together with international expansion to a central part of its strategy.
Quanbeck said it’s hard to make the brand appealing to everything for sale to customers without having to see it in person.
“But when you can see the store visually, you have a great customer experience where we can tell the story,” Quanbeck said. Our IRL is really high. ”
Quanbeck and Ming, alumni of now bankrupt Charlotte Russe, know very well the dangers of over-expanding unprofitable store fleets and say they are taking a balanced approach to Realize physical stores. Quanbeck said Rothy’s 26 stores are small and all profitable, and the company plans to open another eight to ten doors this year.
Rothy’s doesn’t need hundreds of stores, but she wants to see the fleet grow to 75, or even 100, according to Ming.
“But we also want to make sure our wholesale partners are in the picture,” Ming said. “We will be in (Nordstrom) in March…They have more stores than we have ever been, so they may be in the market, we may We won’t decide to open a store, but we still have a partner that allows our customers to shop.”
When asked if Rothy would do an IPO or it looks like she was going to get an IPO, it said the business didn’t exist yet – her team didn’t need to be distracted.
“We had a very good year, but… I kept telling the team that the year has not become a trend,” Ming said. “So we really focused on this year. I think if we had another wonderful One year, about a year or two, I think we can really take a step back and say, ‘What’s next?'”
