The direct-to-consumer footwear brand Rothy's has celebrated its most successful year to date, following the appointment of retail veteran Jenny Ming as CEO. Ming, known for her role as a co-founder of Old Navy, took over from co-founder Stephen Hawthornthwaite in January 2024. Under her leadership, Rothy's increased sales by 17% to reach $211 million in 2024, marking its highest volume year since its inception nearly a decade ago.
In 2024, Rothy's experienced a 20% growth in comparable store sales and reported positive EBITDA with margins exceeding 10%. This performance stood out as the U.S. footwear market remained flat compared to the previous year, according to Circana.
The company's growth stemmed from an expansion into wholesale and a strategic focus on brick-and-mortar stores. This shift comes as direct-to-consumer brands face challenges with pure-play models that once captivated investors. Wholesale partnerships have proven essential for customer acquisition, and physical stores continue to hold importance.
As online-only businesses confront the complexities of their model, successful companies are integrating stores, wholesale partnerships, and e-commerce to ensure profitability. Rothy's CEO Jenny Ming emphasized the need for a holistic approach, stating, "It's really thinking broadly about what our customer wants."
Channel diversification alone cannot rescue a business that doesn't meet market needs. The footwear industry and specialty retail are fiercely competitive, and Rothy's must continue efforts to diversify, scale, and expand into new categories to maintain its performance.
Launched in 2016, Rothy's quickly gained recognition for its sustainable manufacturing practices, using recycled plastic to produce machine-washable products. By 2019, it had developed a cult following, including high-profile fans like Meghan Markle.
In 2021, Brazilian footwear company Alpargatas acquired a 49.9% stake in Rothy's, resulting in a post-investment valuation of $1 billion. This investment allowed Rothy's to expand its store fleet, although growth had stagnated, and profitability was a challenge.
Jenny Ming, with her extensive experience, joined Rothy's board in 2022 before taking over as CEO. Her focus was on improving profitability and driving sales momentum by aligning products with customer preferences and optimizing marketing spend.
In 2024, Rothy's began testing with select wholesale partners like Anthropologie, Bloomingdale's, Amazon, and Nordstrom. This strategy, combined with store expansion, shifted the revenue mix, with 70% of sales now online and the remainder from stores and wholesalers.
Rothy's plans to build on wholesale partnerships and make stores, along with international expansion, a key part of its strategy. The company aims to open 8 to 10 new stores, focusing on maintaining profitability while expanding its retail footprint.
CEO Jenny Ming noted that hundreds of stores are unnecessary, but she envisions a fleet of 75 to 100 stores. Maintaining strong wholesale partnerships, such as with Nordstrom, allows Rothy's to reach markets without opening new stores.
Regarding future prospects, Ming stated that the business isn't yet ready for an initial public offering or acquisition, emphasizing the need to focus on sustaining success and potentially evaluating options after continued strong performance.
