Kits Eyecare, a Roger Hardy-Backed Online Eyewear Platform, Raises $55 Million (Canadian) via Initial Public Offering

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VANCOUVER—Kits Eyecare Ltd. (TSX: KITS), a digital eyecare platform based here and affiliated with investor Roger Hardy, completed an oversubscribed initial public offering and listing on the Toronto Stock Exchange (TSX) last week. The IPO consisted of the issue of 6.47 million common shares of the company at a price of $8.50 per share. The gross proceeds of the offering were $55 million Canadian (or approximately $43 million in U.S. dollars). Kits shares are trading on the TSX under the symbol “KITS.”

"Completing this IPO is a significant milestone for Kits and a testament to the hard work of our entire team," Roger Hardy, chairman and chief executive officer, said. "We were encouraged by the strong response to our IPO which is a validation of our platform and strategy and allowed us to upsize our offering. The proceeds raised from this listing place us in a strong financial position for growth and success as we continue to disrupt the fragmented and underserved eyecare market."

Hardy is the founder of several recognized online eyewear brands, including Clearly.ca, Coastal.com and Lensway.se. The brands were acquired by Essilor in 2014, as VMAIL reported. Most recently, Hardy was an investor and board member of sunglasses brand PriveRevaux.com, which last February was acquired in part by Safilo, as VMAIL reported.

In a company backgrounder document provided on Tuesday to VMAIL, Kits said it believes its “secret sauce” is vertical integration and automation, which drives production efficiencies and dramatically lowering costs. The company notes that it believes it is building “one of North America’s most automated optical labs [which will] scale to 10,000 glasses per day.”

Kits projected online eyewear sales in 2019 of $3.8 billion (U.S. dollars) and at approximately $4.4 billion in 2020, representing about 16.4 percent growth.

Separately, in a recent filing with SEDAR, an electronic document filing system used in Canada, Kits said revenue in the third quarter of 2020 rose 68 percent compared with the year-ago period, and resulted in “run-rate revenue” for a 12-month period of $81 million.

Kits also noted that approximately 80 percent of revenue is being generated in the U.S. and approximately 20 percent in Canada. It expects to have completed 2020 with full-year revenue of approximately $74 million. (All dollars in Canadian.)

“Our business has been driven by the loyalty of our customers,” Kits said in the filing. “We have delivered over 8.7 million boxes of contact lenses since 2002 and over 65,000 pairs of glasses since we began actively marketing glasses in early 2020. Returning customers drove 69 percent of our fiscal 2019 revenues.”

On its website, Kits notes that it provides customers access to “a vast selection of contact lenses and eyeglasses, including our own exclusive Kits-designed products, as well as a robust suite of online vision tools.” The digital platform, backed by an industry-leading manufacturing and design, “removes intermediaries and enables [Kits] to offer great prices and deliver made to order personalized products with incredible care and accuracy.”

The company said it expects to create “disruption in the industry by constantly pursuing cutting-edge technologies to enable the best customer experience, including online eyewear fitting tools, virtual try-on for glasses, and an integrated online vision test.”

In addition to Hardy, Kits is led by an experienced management team consisting of Sabrina Liak and Joseph Thompson.

The IPO was managed by a syndicate of agents including Canaccord Genuity Corp. as sole book-runner and lead agent, and CIBC World Markets Inc., Scotia Capital Inc., Roth Canada, ULC, Haywood Securities Inc. and Stifel Nicolaus Canada Inc.