Alloy Acquires Dan’s Competition Catalog

Teen apparel mailer Alloy in early October acquired Mount Vernon, IN-based Dan’s Competition, a cataloger of BMX biking equipment and related apparel targeting teen boys. New York-based Alloy has issued approximately 2.1 million shares of its common stock and paid $11 million in cash to complete the deal.

“With this acquisition, we’ve strengthened our leadership position in the teen boys’ direct mail and action sports businesses,” says Alloy chairman/CEO Matthew Diamond. The company anticipates that the acquisition will generate $10 million-$15 million in sales during the next year, with an operating margin in excess of 15%. “Dan’s will be a positive EBITDA and sales growth contributor,” Diamond says.

Alloy plans to marry Dan’s database to that of its California Cheap Skates (CCS) catalog, which sells skateboarding and snowboarding gear and apparel to an audience of primarily teen boys. “There is a significant crossover between Dan’s target market and much of the entire Alloy database, in particular that of CCS,” Diamond says. “Therefore we anticipate a tremendous amount of leverage in mailing among all of our catalogs.” While Diamond won’t disclose the circulation of Dan’s Competition, he says Alloy expects to increase circulation by “double-digit percentages.”

For now, Alloy does not plan to change the catalog’s name, nor does it plan to relocate Dan’s Competition’s operations. “Given the growth of our units, particularly going into holiday, we are not looking to consolidate in the very near term,” Diamond says.

Overall, Alloy expects revenue for the third quarter, ended in October, of $42 million-$44 million. For the year ending in January, the company is planning for total revenue of $157 million-$160 million, with $120 million-$122 million in net merchandise sales and $37 million-$38 million in sponsorships and other revenue. Alloy expects full fiscal year pro forma earnings of $1.5 million-$1.7 million.

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