To make your first steps in line with fashion

There is a fashion trend in the footwear for children which creates practical, comfortable and aesthetic models. This is the vision relied upon by Kolev and Kolev brand which is well recognizable on the Bulgarian market. With no compromise between design and quality, the company is an undisputed leader in the sector of children’s footwear manufacture. Each in every two babies in Bulgaria makes their first steps with the baby slippers (or “buikas”, a more popular term from the past century) which are a market hit, whilst the dream of the manufacturers is that these children’s shoes would become a global product.

On 15th January two events took place which will inevitably have an impact on the market of children’s footwear in our country. The Kolev and Kolev brand presented their new model children’s shoes for toddlers, created by a unique modern technology with 3D knitting of sneakers. On the same day the Capital Investment Fund (CIF) from the Bulgarian Development Bank’s Group officially entered the company as a shareholder and acquired a minority share of 20 per cent of the capital of the shoe manufacturer.

Why Kolev and Kolev

The second transaction of the Fund has again been with a manufacturer in the real sector. A priority of BDB’s subsidiary is that the capital is directed towards companies with a development potential.

„Raising capital is neither easy (nor cheap) way to acquire funds for one’s investment plan. However, it could give a company the freedom to attract an investor possessing the knowledge and experience in corporate management, as well as the respective approach necessary for the development of the business”, Angel Hadzhiev, a procurator of the Fund and representative in the Board of Director of the company comments.

The detailed financial, legal and commercial due diligence has been followed by the judgment that Kolev and Kolev matches the profile of a company with a development potential.

„We continued further with that investment because along with the calculation of the particular return there is a very strong social element – Kolev and Kolev product footwear for children with orthopaedic problems, Angel Hadzhiev pointed out. – It is very important for the Fund that the investments comply with the so-called ESG criteria with directions which are important for the surrounding and social environment, including for the way a company is managed. “

In his opinion, these aspects are underlying the investment framework and the parameters of Kolev and Kolev place them into the group of “interesting” companies.

As a joint shareholder, the risk for the Fund is higher because the investment analysis has been made in a force majeure environment. The corona virus pandemic decreases the cash flows from the closed shops in the shopping malls, despite the triple to quadruple increase in the turnover of the online shop.

The growth forecast corresponds to a finding that the company is growing in line with the current trends in the making of shoes using innovations. With the use of 3D knitting the new shoes make you feel as if you are wearing socks and walking “barefoot “.

There are no boundaries for novelties

Kolev and Kolev’s shoes are emblematic in the toddler segment – mothers can easily put the baby slippers on the feet of their children, equipped with a zipper across the foot, and the little ones cannot take them off alone.

Ivan Kolev and his partner Dimitar Kovachev manage a company with 24 years of history, they have their market and customers and are successful despite the difficulties.

On an annual basis the company sells about 30 thousand of baby slippers. According to statistics about 60 thousand babies are born in the country, so each of two Bulgarian babies makes his/her first steps wearing those shoes.

To make your first steps in the business

The first steps of the company are a curious story. Its founder Ivan Kolev is a model of the self-made businessman. During his study in electronics, the future engineer was looking for a job to make a living and mere chance sent him behind the counter of a shop for children’s footwear.

 „I got interested”, Kolev confides. What followed was the first pair of shoes sold on his own, the cooperation and the first own shops for trade in shoes for the smallest children.

In 1998 Kolev and Kolev decided to make an independent try in the manufacturing of footwear but their aspiration was towards having their own brand. The start was made with the design of slipper shoes, of the “baby bootie” type. A year later accidental memories from the times of the People’s Republic directed their attention to the “buika” (baby slippers). It has turned into their biggest pride and reserved trademark.

„We developed it gradually, so that it could make a smooth transition in the child’s feelings”, Ivan Kolev remembers. – By successful marketing we have established this product on the market. “

In order to succeed in his ambitions, he graduated in marketing and qualified in industrial management in Japan and Austria.

In 2014, along with the children’s series, the company has started a separate orthopaedic footwear line and has entered into a contract with the Agency for Social Assistance. Children’s shoes are made at a custom order, according to doctors’ prescriptions and medical diagnosis, and individual sizes are taken from the child’s feet for that purpose.

 A quick lesson in anatomy and trading

The small child’s foot is comprised of 28 bones, 107 ligaments and 19 muscles, connected through joints and tendons. Kolev and Kolev have studies each of these anatomic features in order to provide support and mobility to the children.

„It is amazing that this small miracle – the foot turns into a stable and strong companion for life”, the entrepreneur adds and explains that they rely on orthopedists’ advice for their new developments.

The company has nine own stores (eight in Sofia and one in Plovdiv), as well as a franchise in Burgas. In its production bases in Sofia and Vetren near Pazardzhik over 70 experts perform the complete cycle from shoe modelling to the ready-to-use finished product. Furthermore, they produce about 600 pairs a day.

 The equipment

The produce of Kolev and Kolev is made on Italian machinery at a high technological level, most of which has been purchased with EU funding.

 „Presently we have the self-confidence of being the best not only in Bulgaria but on the global markets too”, the entrepreneur assures. He confirms that in a technical aspect Kolev and Kolev is comparable to every good global company.

The company has the potential to develop its own brands and despite the crisis it will not become a subcontractor of other manufacturers.

 To grow bigger

Dreams sometimes stumble into financial barriers. We had ideas of an IPO but the company size appeared small. We would come out on the BEAM market and become one of the first companies on it; however, the pandemic occurred and since March 2020 all investors have withdrawn’, Ivan Kolev revealed the process of seeking fresh money for the company growth.

Thus, the journey of the partners at Kolev and Kolev has reached the Capital Investment Fund which increased the company capital with BGN 1 million. Their idea is not only secure and expand their operations through fresh working capital, but also to enter new markets, such as neighbouring Romania.

„With the help of the Fund we have set as an objective to turn our new baby slippers from a local into internationally recognizable product. We have all the prerequisites in place to make this huge step – they have a modern look, exquisite design, they are light and sporty”, Ivan Kolev explains.

The entrepreneurs are also planning an R&D activity -development of the new children’s footwear through use of modern materials and technical innovations and their patenting. They will also invest in the promotion of their products for the purpose of establishing and reaffirming of their trademark outside the country.

Advice in partnership

„In the preliminary conversations with our partner we made an indication that we would provide the best expertise within the Group”, Angel Hadzhiev revealed. – In return, we will expect an approach towards corporate management and financial reporting according to the best international practices. “

The entry into Romania should be gradual – first with a website fully integrated into the ERP system of the company, and with opening of physical shops not earlier than at the second stage. This strategy is adapted to the initial business model of the company where they apply for share participation and envisage simultaneous opening of several shops. „There is a solid financial rationale as to why would this approach be preferable for establishment of the brand on a new market”, Angel Hadzhiev explains.

In order to realize the ideas of Kolev and Kolev, next week the partners will be discussing new strategies for the company development.

Business planning will help for the monitoring of stocks on the operational level, for the placement of orders for materials, analysing the margins at which the particular goods are sold, as well as for the tracking of the results of individual shops, in order to be able to respond promptly in the event of a serious deviation from the set targets.

An assessment should be also made of the funds to be envisaged for marketing and advertisement necessary for a successful investment.

„It is not only the figures that are important for this transaction to become a part of our portfolio. Fundamental for the investment is the team managing the company and its readiness to make efforts in the future for the success of our partnership”, Angel Hadzhiev noted.

In line with fashion trends

Over the last several years the sneakers and daily sports shoes with a knitted top (knitted shoes) have become a real hit. The leading sports trademarks, such as Nike, Puma and Adidas are continuously competing to present new models.

„Innovation are in our blood. They are part of our DNA; however, in all these years our focus has been on children’s shoes”, Ivan Kolev states.

 With responsibility and knowledge of the specifics of a child’s foot we have started the production of baby slippers using a new innovative 3D K-nit knitting technology. It employs certified materials and has a sporty look. The responses from first sales and the reactions of customers demonstrate that the products are perceived very well.

In addition to being high quality, stable and comfortable, the baby slippers are beautiful with their modern design. But the new 3D K-nit knitting technology has one more great advantage. It is “green” – a few, more efficient materials and operations are used, thus saving energy and reducing waste.

„Knitted textile shoes are a fashion trend and people approve them. Shoes are also produced of leather substitutes with very good characteristics. For example, microfiber is an excellent alternative for the face and lining”, Ivan Kolev confirmed.

Among the company innovations he has pointed out the new shoe line „Mini me “which will provide shoes for all children, from the smallest to the elder ones.

„We will make collections, and the first one to be developed is “Mummy and me” for little girls, followed by one for daddies and boys. When the mother starts walking in her child’s shoes, she will make sure how comfortable and nice they are’, added the entrepreneur whose purpose is to make the brand Kolev and Kolev recognizable with its quality on a worldwide level.