Following years of rapid growth, RYU Apparel inc. (Respect your Universe) is putting the breaks on expansion plans and looking towards a new business strategy to reach profitability.
In a letter to company shareholders, Marcello Leone, CEO, president and chairman of the board, revealed on Wednesday restructuring plans for 2020, as it faces a funding shortage.
“Although we saw 2019 perform better than 2018 in terms of revenue, we knew RYU required additional funding in order to get our business back on track for 2020. This has proven more difficult than we had anticipated, mainly due to RYU's market price,” explained Leone, who described 2019 as the company’s “most challenging year since inception”.
"We believe it is imperative to go back to our roots and continue to build our brand from a "less is more" strategy," he added.
To address the funding shortage, the Vancouver-based athletic brand has already begun to close mall locations including at Sherway Gardens in Toronto and Metrotown just outside of Vancouver, in January. It still operates seven stores across North America, one of which is a mall location.
As it shutters its stores, RYU intends to increase its focus on e-commerce to maximize ROI, and simultaneously reach new communities and customers more quickly and efficiently.
The company will also be taking a step back from previously announced plans to expand into new product categories in order to better manage inventory.
In an effort to reduce expenses, RYU has also had to significantly reduce its Head Office headcount.
As previously announced, it is is aiming to enter a new consulting agreement with a Canadian retail consultant to help the Vancouver-based athletic brand build and develop a new strategic plan targeted for the North American market.
The company is currently planning for financing to happen on or before March 9th, 2020, with the offer of units at $0.03 per unit, with a full warrant priced at $0.05, which it expects will result in the successful appointment of the strategic consultant.
“We are working tirelessly to make the right decisions and we believe that the plan described will overcome the challenges we faced in the last fifteen months and can propel RYU forward to a more stable, and financially profitable, scenario for its future growth,” Leone concluded.
Leone took it upon himself to reinvent RYU in 2015. Having first invested in the apparel line in 2011, he went on to fully acquire it in 2015, overseeing its transformation from mixed-martial-arts brand to athletic tech behemoth.