Alloy Acquires Dan’s Competition

Oct 03, 2001 9:30 PM  By

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

“With this acquisition, we’ve strengthened our leadership position in both the teen boys’ direct mail and action sports business,” says Alloy chairman/CEO Matthew Diamond. While Diamond won’t disclose the circulation of Dan’s Competition, he says Alloy expects to increase its circulation by “double-digit percentages.” In addition, the company expects the acquisition to 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 between all of our catalogs.”

For now, Alloy does not plan to change the catalog’s name, nor has it any plans 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.

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

In other Alloy news, the company has introduced AlloY-Access Reports, which offer marketers, media, and analysts information about industry segments relative to the Generation Y demographic from a database of more than 7.6 million teens and young adults. The Style File, the first AlloY-Access report, will provide data on teen girls’ fashion and buying habits, as well as the trends of teen buyers.