Omikron Capital, a fund active for several years, plans to invest a total of around PLN 350 million, with part of this amount allocated to Moodo – a nationwide clothing retail network developed by the Szyszko family for over a decade.
Polish fashion retailers, having survived difficult years, are entering the new year with optimism, and for some, it’s time to accelerate expansion. For instance, Greenpoint, controlled by Leszek Czarnecki, aims to acquire the Top Secret and DryWash brands and grow by 50%. A new chapter is also opening for Moodo, a family-owned company. A majority stake in Moodo will be taken over by the private equity fund Omikron Capital (pending approval from the Office of Competition and Consumer Protection), valuing the company at tens of millions of PLN. “We have been in the clothing industry for over three decades, and 17 years ago, we decided to create our own brand, Moodo. We chose to open up to an investor for financial support to help us realize our development plans, including expansion into new markets. Succession planning was also important; this scenario allows us to maintain business continuity while securing family interests. I believe that with Omikron’s help, we can achieve much more and at least double the company’s value during the investment period,” says Arkadiusz Szyszko, managing partner of Moodo.
“Moodo has a strong and motivated management team. The current shareholders will retain a significant minority stake, and we will jointly pursue dynamic growth for the company,” adds Maciej Ilwicki, a member of Omikron Capital’s investment team.
Moodo is a family business run by the Szyszko family (Przemysław, Tadeusz, and Arkadiusz). The family started in the 1990s by selling clothing imported from Turkey at marketplaces. They quickly moved into store sales, then opened a wholesale business and a chain of stores (some company-owned and others partner-operated) specializing in second-grade clothing and end-of-line collections. In 2000, the family began producing clothing in Turkey under their own brands, though Moodo was not yet one of them. The idea for a network under the Moodo name, with several in-house brands, emerged in 2005. However, promoting several clothing brands simultaneously with Moodo as a store chain proved too challenging. Thus, in 2006, the first Moodo-branded collections appeared, followed by franchise stores a year later, marking a turning point in the company’s ongoing development.
A Big Business in Small Towns
Omikron is a young player in the Polish private equity market, where Enterprise Investors, Innova Capital, and Abris Capital Partners have operated for decades. The fund made its first investment in 2019 in packaging producer Interton. The following year, it expanded its portfolio to include two companies specializing in metal processing: ZAP-Mechanika and Dagat Eco. Moodo is its first non-industrial project.
“Our initial investments were in manufacturing businesses, but we are not limited to that sector. We seek healthy, proven business models, companies with unique competitive advantages, and significant growth potential with our support. We see all these qualities in Moodo,” explains Paweł Pacak, an investment team member at Omikron Capital.
Moodo’s core business is a nationwide network of over 160 franchise stores specializing in women’s clothing and accessories (it also operates in wholesale). It is challenging to find their stores in major cities, although there are several in the Warsaw metropolitan area (e.g., in Otwock, Sulejówek, and Wołomin). In 2022, Moodo increased its revenue by 14.4% to PLN 79 million and its operating profit by 13.8% to PLN 7.7 million, although net profit fell from PLN 6.2 million to PLN 5.2 million. However, improvements at all levels compared to 2020 are notable.
“The company operates stores in smaller towns in Poland, usually with 10,000 to 60,000 residents, where competition is limited mainly to local boutiques. Therefore, Moodo taps into an underserved market and stands out with its flexible franchise model, making it resilient to market fluctuations, as proven during the COVID-19 pandemic,” says Paweł Pacak.
More Stores and Improved E-commerce
Due to the limited competition from large chain players in small towns, Omikron sees significant scaling potential for the acquired business. It was satisfied with last year’s results, similar to those of 2022, despite the challenging situation in retail. In the coming years, Moodo is expected to grow substantially.
“Our main focus will be on the dynamic expansion of the franchise network, adding 15-20 stores annually. We are not ruling out entering foreign markets similar to Poland’s. We also plan to significantly increase e-commerce sales,” says Maciej Ilwicki.
“We want not only to attract new franchisees but also enable growth for existing ones. As for e-commerce, we will focus on implementing an omnichannel strategy to integrate online and offline channels and provide customers with a consistent shopping experience,” adds Arkadiusz Szyszko.
Omikron seeks companies with strong, growing teams (for example, those facing succession challenges) that generate annual EBITDA of PLN 5-25 million and can potentially double their results within 5-7 years. Moodo will be its fourth investment, and the fund aims to build a portfolio of eight or nine companies, investing a total of PLN 350 million, averaging about PLN 40 million per project. Half of the capital has been raised, and the remainder is expected from investors by year-end.
“We are in negotiations with several entities from various industries, including food, healthcare, and broadly defined metalworking. This year, we aim to complete a maximum of four transactions, two of which are planned for the first half,” says Piotr Banaszkiewicz, managing partner at Omikron Capital.
Mariusz Bartodziej, Puls Biznesu, https://www.pb.pl/mlody-fundusz-przejmie-modowa-siec-1205409