Perfect Moment: Well-Poised Despite Struggles

## Summary - Despite disappointing FY25 Q1-3 results, I expect the company to sustain 20% sales growth in the medium-term as it expands its global presence and product offering, supported by key hires. - Assuming a 33% probability of failure, to account for the uncertainty as to whether it can continue to raise capital to offset its losses, I estimate, using DCF analysis, a fair value for the company's stock is $1.55. ## 1. Background Perfect Moment (PMNT) is a London-based luxury skiwear company, originally founded in 1984 by professional skier Thierry Donard, but relaunched by Jane and Max Gottschalk in 2012. Its trailing 12-month (TTM) revenue is $21.3M (1.3% of the luxury skiwear market), split evenly across its wholesale and ecommerce channels, and also its three product categories – jackets, knitwear, and pants/ suits. <img src = "https://s3.eu-west-2.amazonaws.com/jackdry.com/articles/2025/Perfect+Moment%3A+Well-Poised+Despite+Struggles/images/products.png" width="60%"> The brand's chic designs, together with its savvy, influencer-led, marketing strategy, have helped it amass 413k followers on Instagram, considerably more than longer-standing competitors such as Bogner (137k), Fusalp (121k), Mackage (255k) and Goldbergh (340k). <img src="https://s3.eu-west-2.amazonaws.com/jackdry.com/articles/2025/Perfect+Moment%3A+Well-Poised+Despite+Struggles/images/ig-followers.png" style="width: 140%; max-width: calc(100vw - 2rem); position: relative; left: 50%; transform: translateX(-50%);"> After growing sales by 42% in FY23 (which runs from April 2022 to March 2023), the company raised $8M in an IPO in February of last year, pricing shares at $6 each. Due to disappointingly flat FY24 Q3 and Q4 results, however, the stock’s price fell to $1 over the following 6 months. <img src = "https://s3.eu-west-2.amazonaws.com/jackdry.com/articles/2025/Perfect+Moment%3A+Well-Poised+Despite+Struggles/images/price.png" style="width: 140%; max-width: calc(100vw - 2rem); position: relative; left: 50%; transform: translateX(-50%);"> Results for FY25 Q1-3 have continued to underwhelm. Sales have been broadly flat, ignoring the loss of $3M due to a lucrative collaboration with Hugo Boss ending in FY24, and SG&A expenses are up 45%, largely due to increased legal/ professional fees (as a result of now being public), and payroll costs. ## 2. Looking Forward ### 2.1 Revenue The company is trying to grow by expanding both its global presence and product offering. To increase wholesale distribution, it's recently partnered with 5 regional sales agencies in North America, Europe and Japan and, partly due to this, bookings for its flagship Autumn/ Winter 2025 collection are up 30% vs last year’s collection <a href="#endnote-1">[1]</a>. This effort was led by Rosela Mitropoulos, who was appointed to the new position of Head of Business Development last November, after driving "more than 3x" growth at British fashion-house Erdem <a href="#endnote-2">[2]</a>. Complementing this effort, and also its strengthening ecommerce platform, the company is opening 7 seasonal stores next season in key cities/ ski resorts, after testing with 3 pop-ups last season in SoHo (New York), Bicester (England) and Kitzbühel (Austria) <a href="#endnote-3">[3]</a>. Open for 2 months (on average), the pop-ups generated $516k in FY25 Q3, suggesting, albeit crudely, that next season's 7 stores, open for 6 months, could generate $3.6M (or 33% of TTM DTC sales). Year-round stores are planned for FY27. Supported by the recent hiring of production-veteran Vittorio Giacomelli from Canada Goose (and 3 of his former team), management is also plotting to expand into luxury outerwear (a 10x larger market than luxury skiwear <a href="#endnote-4">[4]</a>) by offering lighter, less-technical, pieces. As a guide to how this might affect sales, Fusalp has made a significant push into outerwear since the pandemic, and seen its sales grow at a CAGR of 26% from €25M in FY20 to €63M in FY24 <a href="#endnote-5">[5]</a>. In addition to these pieces, the company is releasing a special capsule next season in partnership with the Alpine F1 team (a shrewd move given F1's surge in popularity), as well as one for the 2026 Winter Olympics in Milano Cortina, and I expect these will go some way to replacing the loss of sales due to the termination of the Hugo Boss partnership. As it builds on these efforts, and buoyed by the fact that both the luxury skiwear and outerwear markets are forecast to grow at a CAGR of more than 6% until 2033 <a href="#endnote-4">[4]</a>, I'm confident it'll be able to sustain 20% sales growth in each of the next 5 years. ### 2.2 Gross Margin Despite the new US tariffs (which will increase COGS by 3% assuming production is moved from China <a href="#endnote-6">[6]</a>), I expect the company's full year gross margin to increase from 51% (the current TTM figure) to 60% over the next 5 years. Firstly, due to planned price increases <a href="#endnote-7">[7]</a>. If the company raised the prices of its ski jackets and suits by 20%, which is viable given they're priced 20-40% lower than those of their nearest competitors, despite being of similar quality, its gross margin would increase by 4 percentage points (ppts), all else being equal <a href="#endnote-8">[8]</a>. <img src = "https://s3.eu-west-2.amazonaws.com/jackdry.com/articles/2025/Perfect+Moment%3A+Well-Poised+Despite+Struggles/images/product-prices.png" style="width: 140%; max-width: calc(100vw - 2rem); position: relative; left: 50%; transform: translateX(-50%);"> And secondly, due to logistical efficiencies. By opening its first US distribution centre last October – which has substantially lowered outbound/ return shipping costs for US orders (as they used to be shipped from the UK), and enabled duties to be paid on transfer rather than retail prices – I estimate the company has increased its ecommerce gross margin by 10 ppts, from 41% to 51%, and thus its aggregate one by 5 ppts <a href="#endnote-9">[9]</a>. Further increases are likely in the short-term as the company reviews its European logistics in FY26. After year 5, as the company shifts more of its sales to DTC, I expect its gross margin to increase towards 65%, closer to that of Canada Goose (69%), Moncler (78%) and Bogner (68%). ### 2.3 SG&A Expense Using data from FY22 – 24, the company's SG&A expense may be estimated as a fixed $11.7M plus 35% of sales <a href="#endnote-10">[10]</a>. I expect the fixed portion to increase by $1.8M going forward due to public company costs <a href="#endnote-11">[11]</a>, and the ratio of the variable portion to sales to remain at 35% for the next 5 years. Although the push into physical retail will put upwards pressure on this ratio, I expect this to be offset by operational efficiences, driven by the newly appointed CFO and COO, Chath Weerasinghe (formerly VP of Finance & Operations at Canada Goose). After year 5, I expect its SG&A margin to decrease from 60% (which is what it'll be assuming the above and 20% sales growth in years 1 – 5) to 50%, comparable to that of Moncler (48%). ### 2.4 Reinvestment In the short-term, I expect the company's marginal sales/ capital ratio to be roughly 3 (which is high for an apparel company) as I don't believe it'll have to make significant further investment to expand its wholesale distribution and product offering (especially since it outsources its production). Further ahead, as it continues to expand its physical presence, I expect this ratio to decrease towards 1.5, which is the average for European apparel companies <a href="#endnote-12">[12]</a>. ## 3. Valuation ### 3.1 Assumptions The table below summarizes my forecasts from section 2, and the plot underneath shows the implications for the company's operating margin. <table> <tr> <th></th> <th>Years 1 – 5</th> <th>Years 5 – 15</th> <th>Terminal</th> </tr> <tr> <td>Sales CAGR</td> <td>20%</td> <td>20% ➝ 2%</td> <td>2%</td> </tr> <tr> <td>Gross Margin</td> <td>51% ➝ 60%</td> <td>60% ➝ 65%</td> <td>65%</td> </tr> <tr> <td>SG&amp;A Expense</td> <td>35% of Sales + $13.5M</td> <td>60% ➝ 50% of Sales</td> <td>50% of Sales</td> </tr> <tr> <td>Sales/ Capital Ratio</td> <td colspan="2">3 ➝ 1.5</td> <td>1.5</td> </tr> </table> <img src = "https://s3.eu-west-2.amazonaws.com/jackdry.com/articles/2025/Perfect+Moment%3A+Well-Poised+Despite+Struggles/images/margins.png" style="width: 140%; max-width: calc(100vw - 2rem); position: relative; left: 50%; transform: translateX(-50%);"> In addition to these forecasts, I assume the company currently has a cost of capital of 12%, since this is the dividend yield of its newly-issued preferred stock <a href="#endnote-13">[13]</a>, and that this will decrease to 7.4% over time, which is the average for US apparel companies <a href="#endnote-14">[14]</a>. I also assume the company pays tax at a rate of 20%, since this is the average of the UK and Swiss rates (where the company has subsidiaries), and has a tax loss carryforward of $7.3M (the amount specified in its latest 10-K filing). Lastly, to account for the considerable doubt that the company will be able to raise the capital needed to absorb its initial losses, I assume, perhaps conservatively, that it has a 33% probability of failure. ### 3.2 Results Given these assumptions, the tables below show my forecasts for the company's FCFF, and the output of my DCF analysis. <div style="display: flex; gap: 20px; align-items: flex-start; width: 140%; position: relative; left: 50%; transform: translateX(-50%); max-width: calc(100vw - 2rem);"> <table style="flex: 1;"> <tr> <th>Year</th> <th>Sales ($M)</th> <th>NOPAT ($M)</th> <th>Reinvestment ($M)</th> <th>FCFF ($M)</th> </tr> <tr> <td>1</td> <td>25.6</td> <td>-8.9</td> <td>1.7</td> <td>-10.7</td> </tr> <tr> <td>2</td> <td>30.7</td> <td>-7.5</td> <td>2.1</td> <td>-9.6</td> </tr> <tr> <td>3</td> <td>36.8</td> <td>-5.6</td> <td>2.6</td> <td>-8.3</td> </tr> <tr> <td>4</td> <td>44.2</td> <td>-3.3</td> <td>3.3</td> <td>-6.5</td> </tr> <tr> <td>5</td> <td>53.0</td> <td>-0.2</td> <td>3.8</td> <td>-4.0</td> </tr> <tr> <td>6</td> <td>62.7</td> <td>0.7</td> <td>4.2</td> <td>-3.5</td> </tr> <tr> <td>7</td> <td>72.9</td> <td>1.9</td> <td>4.5</td> <td>-2.6</td> </tr> <tr> <td>8</td> <td>83.6</td> <td>3.5</td> <td>4.8</td> <td>-1.3</td> </tr> <tr> <td>9</td> <td>94.3</td> <td>5.4</td> <td>4.8</td> <td>0.6</td> </tr> <tr> <td>10</td> <td>104.7</td> <td>7.6</td> <td>4.7</td> <td>2.9</td> </tr> <tr> <td>11</td> <td>114.3</td> <td>10.1</td> <td>4.4</td> <td>5.7</td> </tr> <tr> <td>12</td> <td>122.8</td> <td>10.9</td> <td>3.8</td> <td>7.1</td> </tr> <tr> <td>13</td> <td>129.6</td> <td>12.3</td> <td>2.9</td> <td>9.5</td> </tr> <tr> <td>14</td> <td>134.6</td> <td>14.5</td> <td>1.7</td> <td>12.8</td> </tr> <tr> <td>15</td> <td>137.2</td> <td>16.5</td> <td>1.8</td> <td>14.6</td> </tr> </table> <table style="flex: 0.55;"> <tr> <td>PV(FCFF Years 1-15)</td> <td>-$18.1M</td> </tr> <tr> <td>PV(Terminal Value)</td> <td>$71.7M</td> </tr> <tr> <td>Value of Operations</td> <td>$53.6M</td> </tr> <tr> <td>Debt <a href="#endnote-15">[15]</a></td> <td>-$4.7M</td> </tr> <tr> <td>Employee Options <a href="#endnote-16">[16]</a></td> <td>-$0.2M</td> </tr> <tr> <td>Excess Cash <a href="#endnote-17">[17]</a></td> <td>$7.0M</td> </tr> <tr> <td>Value of Equity</td> <td>$55.8M</td> </tr> <tr> <td>Failure Probability</td> <td>33%</td> </tr> <tr> <td>Adj. Value of Equity</td> <td>$37.2M</td> </tr> <tr> <td>Shares Outstanding <a href="#endnote-18">[18]</a></td> <td>24,074,655</td> </tr> <tr> <td>Value Per Share</td> <td>$1.55</td> </tr> </table> </div> ## 4. Endnotes <ol> <li id="endnote-1"><a href="https://web1.ir365connect.com/perfectmoment/single-press-release.php?id=a0f71d9a-d32e-445e-9a50-d5aa72ef90cd">https://web1.ir365connect.com/perfectmoment/single-press-release.php?id=a0f71d9a-d32e-445e-9a50-d5aa72ef90cd</a></li> <li id="endnote-2"><a href="https://web1.ir365connect.com/perfectmoment/single-press-release.php?id=40160b90-cd68-46f4-a575-6ceec5b6836f">https://web1.ir365connect.com/perfectmoment/single-press-release.php?id=40160b90-cd68-46f4-a575-6ceec5b6836f</a> <li id="endnote-3">The company's March 2025 investor presentation states its plan to open "three new seasonal popups and four store-within-a-store". Although no time frame is specified, I think it's safe to assume this is planned for FY26, particularly as there's no mention of year-round stores, which are planned for FY27.</li> <li id="endnote-4"> <a href="https://www.businessresearchinsights.com/market-reports/luxury-outerwear-market-108930">https://www.businessresearchinsights.com/market-reports/luxury-outerwear-market-108930</a> <a href="https://www.businessresearchinsights.com/market-reports/luxury-ski-clothing-market-103554">https://www.businessresearchinsights.com/market-reports/luxury-ski-clothing-market-103554</a> </li> <li id="endnote-5"> <a href="https://uk.fashionnetwork.com/news/Fusalp-has-fashion-to-thank-for-getting-back-on-track-in-2021-2022,1377404.html">https://uk.fashionnetwork.com/news/Fusalp-has-fashion-to-thank-for-getting-back-on-track-in-2021-2022,1377404.html</a> <a href="https://www.linkedin.com/posts/annesophiebonnisseau_the-first-fusalp-store-opened-in-2019-in-activity-7051815863561150464-Uulf/">https://www.linkedin.com/posts/annesophiebonnisseau_the-first-fusalp-store-opened-in-2019-in-activity-7051815863561150464-Uulf/</a> <a href="https://wwd.com/business-news/retail/fusalp-us-expansion-tariffs-lifestyle-branding-ceo-1237074247/">https://wwd.com/business-news/retail/fusalp-us-expansion-tariffs-lifestyle-branding-ceo-1237074247/</a> </li> <li id="endnote-6">Assuming 34% of sales come from the US (the current TTM figure), an additional 10% tariff paid on transfer price will increase COGS by roughly 0.34 x 0.1 = 0.034 (3.4%).</li> <li id="endnote-7">Prices increases are mentioned as a strategy to improve margin in the company's FY25 Q3 10-Q filing.</li> <li id="endnote-8">As the company's sales are split evenly between jackets, knitwear and pants/ suits, and assuming that sales are split evenly between pants and suits, the change in gross margin resulting from increasing the prices of jackets and suits by 20% may be estimated as COGS/Sales - COGS/(Sales + 1.5/3 x Sales x 0.2). Plugging FY25 Q3 COGS and sales into this equation gives 4%.</li> <li id="endnote-9">I first estimated gross margins for the company's wholesale, collaborations and ecommerce channels before opening the distribution centre as 56%, 61% and 41%. I did this by regressing its gross profits on each channel's revenue in FY24 Q2-4 and FY25 Q2. I then re-estimated its ecommerce gross margin as 51% using FY25 Q3 data, assuming its wholesale and collaborations margins stayed constant, and that its retail margin was 60%. Since US ecommerce orders first flowed through the centre in FY25 Q3, this represents the ecommerce margin after opening the centre.</li> <li id="endnote-10">To estimate this I regressed the company's SG&A expense in FY22 – 24 on its revenue, including a constant.</li> <li id="endnote-11">The company's FY25 Q3 10-Q filing specifies that its SG&A increased in FY25 Q1-3 by $966k YoY due to incremental public company costs, $198k YoY due to NYSE and EAC declarations, and $193k YoY due to public D&O insurance. Thus full-year public company costs may be estimated as 4/3 x ($966k + $198k + $193k) = $1.8M.</li> <li id="endnote-12"> <a href="https://pages.stern.nyu.edu/~adamodar/pc/datasets/capexEurope.xls">https://pages.stern.nyu.edu/~adamodar/pc/datasets/capexEurope.xls</a> </li> <li id="endnote-13"> <a href="https://web1.ir365connect.com/perfectmoment/single-press-release.php?id=5a715d61-241d-4ca2-ade4-c384a71675f9">https://web1.ir365connect.com/perfectmoment/single-press-release.php?id=5a715d61-241d-4ca2-ade4-c384a71675f9</a> </li> <li id="endnote-14"> <a href="https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/wacc.html">https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/wacc.html</a> </li> <li id="endnote-15">The company's total interest bearing debt in FY25 Q3 was $6.7M. Since then, however, Kahala19 have converted their promissory note into common stock, decreasing the outstanding debt by $2M.</li> <li id="endnote-16">The company states that the fair value of its outstanding options in FY25 Q3 is $162k.</li> <li id="endnote-17">I assume the company needs 10% of its TTM sales as operating cash, which is $2.1M. Since the company's cash as of FY25 Q3 is $2.8M, and it more recently raised $6.4M by issuing preferred stock, I estimate its excess cash to be $2.8M + $6.4M - $2.1M = $7.1M.</li> <li id="endnote-18">The company had 16,557,889 shares outstanding as of FY25 Q3. Since then, Kahala19 converted its $2M promissory note into common stock at a $1 per share conversion price, creating 2M of new shares. And, $6.4M of convertible preferred stock was issued with a conversion price of $1.1601 per share. For simplicity, I assume these are immediately converted into common stock, increasing the number of shares outstanding by a further 5,516,766.</li> </ol>