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Billion Dollar Unicorns: Kendra Scott Shows that Women CAN Build Unicorns

Posted on Thursday, Feb 23rd 2017

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According to a report by IBISWorld, the US jewelry store industry is estimated to have grown 1.2% annually through the years 2011 to 2016 to be worth $35 billion in 2016. The industry is expected to grow at a modest 0.4% annually through till 2021, primarily due to the decline in precious metal cost over the years. But decelerating growth rates do not seem to bother the new member of the Billion Dollar Unicorn brigade Kendra Scott.

Kendra Scott’s Offerings

Austin, Texas-based Kendra Scott was founded in 2002 by Kendra Scott herself. The idea for setting up the business came to Kendra when she was recovering after giving birth to her first son. As a hobby, Kendra used to design and make jewelry for her friends. She knew that jewelry in the shops was either the high-end precious kind or the cheaper knick-knack kind. It did not offer a mid-range option for consumers, a market she figured would be lucrative. With $500 as initial seed money, her collection of hand-made jewelry and her baby in a stroller by her side, Kendra visited multiple stores to collect orders for her new business. Since then, she hasn’t looked back.

Prior to setting up Kendra Scott, she had established Hat Box, a hat shop in Austin. The retail store had two locations and did well initially, but it never successfully adapted to the Internet era. Within a decade, it shut down, but it taught Kendra the essentials of running a business of her own.

She has leveraged that experience to run Kendra Scott more efficiently and successfully. The initial days for Kendra Scott were tough as Kendra was a single mother, raising two kids while trying to establish a business of her own. She kept costs to a minimum by setting up her workshop out of a spare bedroom of her house. She was also careful about sourcing her material by buying direct from suppliers. Initially she had to choose from the stone shapes that were on offer, but as business took off, she could order customized shapes.

Initially, Kendra continued to sell her pieces to retailers. For the first six years, business did well. She was now selling her customized jewelry, including the famous oval earring Danielle. She had managed to add stores like Nordstrom as her clients. Then in 2008, recession hit. Some of her customers filed for bankruptcy and business stopped growing. But instead of folding shop like she had done with the Hat Box, Kendra decided to set up her own website. She also decided to get closer to her end consumer by opening her first retail store in Austin.

Over the years, she has enhanced both her offline and online presence. Kendra Scott has more than 35 stores spread across Alabama, Arizona, Florida, Maryland, and Pennsylvania. As business began to pick up again, she added more talent and, more recently, diversified her offerings. Besides jewelry, Kendra also sells home décor products and allows her customers to build their own designs. Most of her jewelry is still priced under $100, and has been worn by celebrities such as Sofia Vergara and Mindy Kaling.

Kendra Scott’s Financials

Kendra has managed to take the right steps all along and the results can be seen in the steady growth of her business. Revenues have grown from $75 million in 2014 to $110 million in 2015. Revenues for 2016 were pegged at $150 million.

Details of Kendra Scott’s financing are not known. Investors in the business include Norwest Venture Partners, which had taken a 20% stake in 2014 for an undisclosed sum. In December last year, Berkshire Partners invested an undisclosed sum at a valuation of $1 billion. Kendra claims that going public is not on her radar, and that she would like to build a legacy of her own. But Kendra may not have much choice there as the investors will look for an exit.

Over the years, Kendra’s market space has changed. Where there was little competition, now there are both big and small players in the industry. Big players include names like Pandora which offers semi-precious jewelry at competitive prices through its retail and online store. Other smaller competitors include the likes of BaubleBar which has focused its growth in the digital segment.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

Photo Credit: VisitPlano/Flickr.com 

This segment is a part in the series : Billion Dollar Unicorns


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