Plukka (ASX:PKA) talks new manufacturing partnership


by Carolyn Herbert

Plukka Limited (ASX:PKA) Managing Director,Natalia Obolensky discusses the company’snew distribution and manufacturing partnership with Treliss Worldwide.

Carolyn Herbert: Hello I’m Carolyn Herbert from the Finance News Network and joining me from Plukka, is Managing Director Natalia Obolensky. Natalia, welcome to Sydney.

Natalia Obolensky: Thank you for having me.

Carolyn Herbert: Can you start by giving us a quick recap of the business and your growth strategy?

Natalia Obolensky: Plukka is an international, multi-brand jewellery company. We have a permanent store in Hong Kong and a permanent store in London and a global e-commerce platform. Plukka is a combination of the word “pluck” meaning courage and “pukka” meaning reliable, upstanding. What we do is we find the most courageous and creative jewelers and we ensure that they are indeed reliable and genuine and we bring that offering to our customers.

Carolyn Herbert: Natalia you are new to the position of Managing Director, can you tell us a bit about your background?

Natalia Obolensky: My background is as a management consultant with Bain and Company, from there I went on to complete my MBA from INSEAD and founded my own business called City Swish, which was an on-demand consumer lifestyle services business in London which I sold to a competitor at the end of last year and I’m delighted to have joined Plukka as Managing Director.
Carolyn Herbert: And now to your manufacturing and distribution agreement you have just signed with Treliss Worldwide, can you tell us a little bit more about this?

Natalia Obolensky: I’m delighted to be talking to you about the Treliss agreement today; we signed this just yesterday so it’s still exciting news for us. Treliss is an upstream diamond cutter and polisher and by partnering with them, we’re essentially in a strategic partnership that enables us to move up the value chain. There are a couple of key advantages to this, the first is that we are able to combine our data to make sure we are focused on the most commercially viable products at any given time.
Treliss know a lot about the market because they produce jewellery for many distributors across the world and we understand the downstream consumer very well and by bringing that together we are able to combine that information to be more effective.
The second point is that the partnership with Treliss enables us to focus on our Plukka range and really developing our own brand. We can use their manufacturing expertise to make sure we are building the best possible range that we can focus on. Clearly our own range commands higher margins so this has a positive effect on our margin in business in general.
The third point is we are very excited to be able to launch an incubation program and Treliss is really a key component of that. It’s worth noting that one of the key barriers to entry for a new jewellery designer is that they need to invest, the gold, the diamonds, the expensive raw materials to be able to make their first range.
By partnering with Treliss we can go to the top design schools in the world, for example a Parsons, and take the most creative students there and create that first range for them with some commercial criteria we get from the data sharing that I mentioned, so that we get exclusivity with new designers in the most creative means possible, while making sure that as Plukka we are not taking on the additional inventory risk; Treliss are able to manufacture that on our behalf.

Carolyn Herbert: To financials now, what are the near term financial goals of the company and what’s the company’s current cash position?

Natalia Obolensky: We raised $10 million dollars at the end of last year via our reverse takeover so we are in a strong cash position moving forward we are really in the growth and acceleration phase, we’ve laid the foundation for a strong growth program for the next couple of years. Our revenue last year was just under $2 million at a 40 per cent gross margin. We plan to maintain that gross margin going forward and really start to build on our revenue. Ideally we would like to see 2 to 2.5x growth over the next year or so starting to really build on what we’ve got so far.

Carolyn Herbert: So what’s your growth strategy going forward?

Natalia Obelensky: Our growth strategy centres around a couple of different things. The first is the incubation program that I just mentioned and leveraging our partnership with Treliss both to take on the ideas and the designers that they bring to us, the partnerships that they can give us access too, as well as developing our own brand and incubating designers under our own name.
The second is continuing to open stores. We see a huge correlation between the offline and the online and we are a bricks and clicks model. For example we had a temporary store in a New York on 77th and Madison and by virtue of having that presence in New York we actually saw an increase of sales across the country so we really can see that link very clearly.
As such we are looking to open an additional store in the US ideally a permanent store and that will reinforce our bricks and clicks model. Then the third piece is that we are looking to drive as much traffic online as possible and a lot of our marketing and a lot of our focus over the next 6 to 12 months will be on driving digital sales via a variety of different channels, paid online and things like SEO and getting our name recognized and ensuring we are at the forefront of the jewellery consumers mind.

Carolyn Herbert: And finally Natalia what is the focus for the company for the next few months and where would you like to see the company a year from now?

Natalia Obelensky: The focus for the company for the next few months will be on a couple of things. The first is really levering our brand new website and our new e-commerce platform that came out a couple of weeks ago that we think really represents the luxury, prestige of our brand and I much easier for consumers to interact with so we are looking forward to seeing that and seeing a positive impact from that and focusing there in the immediate short term. We’ll also be looking at our marketing calendar over the rest of the year.
We are focused quite heavily on the promotion of our new store in London that opened earlier this year and we’ll be looking to have a fairly full marketing calendar in the US including an event we sponsor Watermill in New York in July. A year from today my hope is that we will have doubled our revenue and we will be well on our journey towards profitability and a cash break even towards the middle of 2018.

Carolyn Herbert: Natalia Obolensky thanks for the update on Plukka.

Natalia Obolensky: Thank you very much for having me.