In 2018, we changed the supply chain from Asia to Europe, so we had no denim in stock for almost 6 months from May to September, which resulted in very low revenue for 2018 and created an abnormally low YoY comparison. There 2018 would have been 50% to 75%+ higher, which would make 2019 revenue growth around 65% to 75%.
Gross Margin Notes:
Gross margin increase is driven by volume purchases. Currently we are ordering minimum quantities. We would expect a significant decrease in cost per unit with orders for every increase in 1,000 units per style or 1% annually. This significant savings would . be slightly offset by higher inventory write-offs associated with larger orders and more style risk.
Contribution Margin Notes:
Contribution margin increase is driven by volume discounts in packaging and shipping costs. We would expect small decreases in packaging and shipping rates, but combined should equate to 0.5% annually.
Total Operating Expenses:
We would expect to leverage our salaries and benefits. We should not have to hire people at the same rate as our revenue growth.
We would expect to leverage our operating expenses as these are more fixed and do not require the same growth rate as revenue.
We would expect to leverage our marketing due to higher repeat customer revenue, which allows us to drive higher revenue without the same customer acquisition cost. The higher our repeat customer rate, the more leverage we get in marketing expenses.
Debt and Old Payables:
We expect to pay off our old payables between now and the end of 2020, as these need to be cleaned up.
We expect to pay off our debt with an equity raise in late 2020, which would significantly lower any potential dilution from this raise.