I had the opportunity to spend 3 hours at Leatt’s booth at Eurobike Expo this past weekend. This even is huge and next year they will be adding an extra day.
Met with Sean Leatt’s CEO twice for 20min each….I was expecting to spend more time with him, but he had other meetings scheduled with distributors and suppliers. I’m fine with that, as it is a great opportunity for him and his colleagues to get in touch with their partners especially as it is the biggest bike expo worldwide. Sean had 7 other colleagues with him. Each had a very tight agenda with either the press, media, marketing, distribution etc...Sean himself had close to 20 meetings during his 3 day stay, and the other team members had a lot of meetings also. I did speak in length with the head of product development based in South Africa and to their sales managers for US and Europe. All are very excited about the new product launches (44 new skus were launched in 2015), especially the helmets (that got a lot of attention and positive feedback form the media, and distributors) but also their new Hydration back packs that are now 100% Leatt product. They were also extremely motivated and passionate about their business and the company. All mentioned that the future is based on continuing to develop new products, make existing ones better and safer and continue to gain market share.
Sean and I had a discussion on how to apply to a more respectable exchange than the OTCQB, and discussed the possibility of an uplifting to the Nasdaq Small Cap. I must say I’m not an expert on this field, so if any of you members have suggestions, I would be happy to get your thoughts.
A few weeks ago there was an article saying that the helmets should have been on the market already a few months ago, but their Chinese supplier had a major fire in its factory and had to push out the rollout by 6 months. Sean confirmed that they will be in stores for the holiday season. The head of Europe sales mentioned that the Motocross helmet will be selling in Germany in December and the mountain bike version one by January, or vis versa, I’m not sure. I tried to get more information on the margins that the helmets will have, but with no success. Sean said we do not launch a product if we can’t get at least 50% margins. The expo booth cost him 15’000$ plus roughly 2’000 to 3’000$ per employee (flight and hotels). He said this was money well spent and would be looking to have a bigger stand next year. He is looking forward to meet you all at the MCC conference in October.
One employee told me that it will soon not be possible for athletes to have other companies featured on the leatt’s neck brace. If sponsors want to have their logo on it they will have to pay royalties to Leatt. The same will apply for the helmets. This could be a very nice new source or revenues for the Leatt especially if companies like Red Bull or Monster want to be featured on the athlete’s helmets and braces
I saw all of Leatt’s competitors and honestly I must say none of them impressed me at all. Product wise, Leatt is by far the leader in neck braces, gaining momentum in knee braces and pushing hard in knee, tibia and elbows pads and making them salves a name in gloves
Atlasbrace: Had 1 sales in an overheated booth close to 90 degrees, as they had an outside stand. He was there joking with a distributor that Leatt invented neck brace space. He mentioned that now Leatt has a helmet that fits perfectly with their neck brace and that Atlas will try and copy them….Sometimes it is funny to just have a close ear at conversations and to be at the right time at the right place. He even said that they were going to soon produce 6’000 braces….This is insignificant when you know that Leatt has sold over 700’000 since they launched the product around 10 years ago. They have 8.1% market share based on October 2014 data from Media Kit survey.
EVS-Sports: Had 1 sales. I found only 2 braces that were hidden under t-shirts. My opinion, this is the worst product were clearly there is no push being made by the company. They have 13.3% of the neck brace market share
Ortema: Is a major Orthopedic company in Germany. There were 2 sales at the booth that was half the size of Leatt’s. The products seem ok but nothing attracted my attention. I could not find their market share, but it must be minimal as Leatt had 63.9%
Alpinestars:An Italian company did not even have a neck brace at the expo. Only 2 sales. They had various knee, tibia, shoulder and elbow products. No real innovation and very sad colors. They have 11.4% market share
KTM special helmet:
Hydration back pack:
My conclusion: Leatt had the largest booth, with the largest amount of sales representatives and that got the most attention by the media and customers. They had the best product offering by a wide margin, the most innovative and the ones I would purchase without any doubt. I’m not preaching for my long position in Leatt’s stock. I’m convinced that in the months and years ahead Leatt will continue to be the supplier of choice for athletes looking to get the best protection available. We will see big sales and profitability increases in the coming quarters. I continue to view this company as the most exciting I have seen in a very long time.