When Perfect Moment sought a fresh round of capital last year, it found investors were excited about the brand, but were reluctant to write the small and unprofitable company a cheque.

So the luxury skiwear maker — which generated $23 million in sales in its fiscal 2023 that ended last March — decided to try the public market instead. But the company’s small capitalisation IPO — in which companies are valued on the stock market at less than $2 billion — was delayed by more than a week, indicating the financial markets remain unwieldy for loss-making start-ups.

Perfect Moment’s stock eventually debuted on Thursday at $6 a share at a $93 million valuation. The brand, which sells $990 ski suits and $590 jackets, raised $8 million, which it will use to invest in growing its team and expanding retail distribution. The brand originally set out to raise $15 million, but chief executive Mark Buckley said the company realised that was a lofty goal in the current financial market and that it only needed $8 million to fund expansion plans.

Perfect Moment’s delayed public market debut is the latest example of a DTC brand forced to get creative in finding an alternative to venture capital. In the past year, investors, facing high interest rates, have avoided putting money in unprofitable brands, with venture funding for consumer brands declining 42 percent year over year in 2023, according to PitchBook. These circumstances forced DTC intimates brand Parade to sell to a little-known strategic for next to nothing after failing to raise capital, while others like activewear seller Bandier and apparel brand Something Navy, are scrambling to avoid bankruptcy.

“It’s quite hard to find those strategic partners, especially over the last 12 months,” Buckley said. “We had some great conversations, people love the brand, but a lot of people are sitting on their money at the moment.”

But in going public, Perfect Moment is essentially putting itself in front of a larger set of investors — who have similarly soured on unprofitable companies. Luxury e-tailer Farfetch was delisted after it received a last-minute bailout from South Korean e-commerce giant Coupang late last year. The stock price of sneaker seller Allbirds, which has seen its sales and profits tank after a botched product expansion play, has fallen more than 90 percent since its November 2021 IPO.

Buckley said he knows Perfect Moment needs to start making money for its share price to progress. The brand’s stock price closed 13 percent lower than its IPO price. But it has reason to be hopeful: The company’s sales doubled in the first six months of the fiscal year that ended last September, and its net losses contracted to $2.6 million, from $7.3 million a year earlier. To close the gap on profits, Perfect Moment plans to open up distribution centres in the US to lower shipping costs and increase margins, expand its retail footprint with partners like Selfridges and Saks Fifth Avenue, and expand newer categories like swimwear.

Investors “will be buying in with upside potential,” Buckley said.

“When we start delivering on our promises, I’d like to think the share price will move in the right direction.”

Finding a New Moment

Founded in 1984 by professional skier Thierry Donard, Perfect Moment was bought in 2012 by former hedge fund manager Jane Gottschalk and her husband Max Gottshalk, who repositioned the company from its focus on extreme sports athletes to a fashion-centric skiwear label. In 2022, it upped its star power by adding Nick Jonas and Priyanka Chopra Jonas as investors and brand ambassadors.

But now, Perfect Moment wants to go beyond the $2 billion luxury skiwear market and sell products outside of the winter months. Gottschalk, the brand’s co-founder and chief creative officer, said this summer Perfect Moment will release a larger assortment of swim and surfwear than it has in previous summer collections. In the colder months, the company will add additional skiwear drops and release lighter items like knitwear in the fall and spring.

The expansion could help lift both repeat purchases and order volume, said Benjamin Bond, a principal consumer growth strategy consultant at management consulting firm Kearney. But Perfect Moment will have to make sure there’s an appetite for its new line of goods with customers, he added. Allbirds, for example, saw its woes worsen after it introduced athletic wear and running shoes that failed to catch on with core consumers.

“What’s important for [Perfect Moment] is to really look at what consumers want from them,” Bond said. “Are customers going to give them permission to be a surf and swim brand?”

Gottschalk is designing the new categories to connect to existing product lines. For example, Perfect Moment’s popular houndstooth ski suit could be reinterpreted as a UV-protectant swimsuit in the same pattern, Gottschalk said.

“You get that automatic link,” she said. “Then you can go into bikinis, accessories, denim, T-shirts, [and] everything that comes with that journey.”

Profiting Globally

Perfect Moment is also building operations in the US, where it generates around 44 percent of its annual sales, to increase profits.

The company currently ships goods sold through its website from a warehouse in London, and fulfilling online orders in the US drags down gross margins, Buckley said. Perfect Moment will hire a US team this year, including a general manager who will spearhead the opening of a new distribution centre.

The US team will also be responsible for improving relationships with Perfect Moment’s US wholesale partners like Saks Fifth avenue, where the brand is ogling for more square footage beyond its current single rack. Buckley said that having shares to offer prospective staffers should help the brand recruit top talent from companies like Nike and Adidas.

Perfect Moment is also planning to open stores in the US and UK by 2026, though it hasn’t signed any leases yet. In the meantime, the brand is starting with temporary shop-in-shops, opening the first at Fred Segal in Los Angeles last October and another at Selfridges in London in December. It will open a third in Harrods this year.

“That’s given us a good test of water to see the look, the feel, and how we function as standalone retail,” Buckely said.

All these plans, however, depend on how Perfect Moment performs as a public company.

The fact that it’s pursuing a small-cap IPO means there are fewer buyers and sellers trading the stock, and less trade volume can make a stock price more volatile, said Bond. It likely doesn’t help that Perfect Moment was sued by Aspen Skiing Company this month for trademark infringement and false endorsement related to its influencer marketing. Perfect Moment declined to comment on the matter. But many companies that go public have legal troubles, and the strength of Perfect Moment’s financial results will ultimately determine how its stock performs, Bond added.

“If you aren’t really controlling the public perception, you can very quickly lose a significant amount of company value,” Bond said.

Editor's Note: The article was revised on 9 February. An earlier version misstated Perfect Moment's sales growth in the first six months of its fiscal year. Sales doubled instead of growing 28 percent year over. year.