Island Pacific (IPI)
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Island Pacific is a global leader in
retail merchandising, store operations, CRM, and multi-channel software solutions with a
reputation for high-quality, high-value, high-reliability software
CEOCFOinterviews: Mr. Tomczak, will you please tell us about your background with Island Pacific?
Mr. Tomczak: My background with Island Pacific is relatively brief. I have been formally involved since about June 2nd, which is when Island Pacific acquired Retail Technology International. I was co-owner and CEO of RTI. At the time of the merger, the Board of Island Pacific appointed me president of Island Pacific and I have been involved since then.
CEOCFOinterviews: How does this combination of companies make Island Pacific stronger?
Mr. Tomczak: RTI was a company that was involved in the point of sale side of the business. Our business plan was to move the focus from the smaller retailers to the mid-tier retailers. RTI has a nice group of mid-tier retailers as customers already. We put together a list of the different applications that the mid-tier retailer would need to run its business and felt we needed a full portfolio of those applications. We looked at various partners to incorporate their products into our product line to build that complete mid-tier offering. When we came to Island Pacific, we found a company that had a portfolio of applications that almost perfectly complemented ours. Island Pacific has a product called IPMS, which is a full merchandising ERP for mid-tier retailers. It is one of the most prominent packages in the retail software sector. We compared the applications or Island Pacific to the applications of Retail Technologies International (RTI), and realized the two combined would result in a full multi-channel offering for the mid-tier retailer. The merger was completed in early June of this year. As one company, we are stronger because we have a complete offering for mid-tier retailers -- from the store to the back office; the merchandising suite and direct sales, and catalog marketing. RTI was a global business with customers in seventy-three countries and products fully translated into fifteen languages. Island Pacific now has a ready-made distribution to deliver its products globally.
CEOCFOinterviews: What are you giving your customers and why do they need it?
Mr. Tomczak: What we are giving our customers is best-of-breed point-of-sale and retail merchandizing management, regardless of channel. Our point-of-sale customers have an application that is totally flexible, and has over nine thousand customers, such as Christian Dior, Gucci and other global retailers. In the store, we help them plan their merchandising promotions, pricing, forecasting, buying and replenishment. Our IPMS solution is used by customers with nearly forty thousand customers of their own, such as Polo, and large retailers that have proven our technology over the years, and proven the return on investment. We have a multi-channel offering so they can manage their web-store and catalog effectively and incorporate those into one system.
CEOCFOinterviews: Are they licensing your technology or do you customize your products for your clients?
Mr. Tomczak: Typically, we license the software. In almost every case, we will do some customization. We do a gap analysis to determine any holes between our out-of-the-box software and what the retailer needs; then we do some add-ons or customizations to bridge those gaps. Normally, we perform an analysis, install the software and are fully live within a three to nine month period, depending upon the size of the customer.
CEOCFOinterviews: What do you do for your customers that perhaps others do not do as well?
Mr. Tomczak: I think what we do that maybe others do not do, or do not do as well, is have a close relationship with our customers. We out-hustle our competition. We have our own support team and our own implementation team. Because of our expertise, we do a very good job of truly understanding the needs of the customer and then working closely with them to make sure that our software is not just working from a technology standpoint, which is important, but we take more of a contemplative approach in making sure that it is being applied to their business. We then continue to maintain a relationship with our customers just to make sure that we are giving value and return on their investment with us. I think we do this better than any of our competition and that is evidenced by the fact that we are ranked number two in customer satisfaction by RIS News, who polls retailers to arrive at their rankings. We are, by objective study, considered to be at the very top of working with customers to provide satisfaction.
CEOCFOinterviews: Are there particular industries or segments of the retail business on which you focus?
Mr. Tomczak: Our targets are in niche, specialty retail. And any department store is a specialty store, whether its sporting goods, shoes or womens apparel. That is where we have an edge over anyone else. But we have one other area of retail where we have a distinctive differentiator and that is global retailers. Retail Pro is a product that is nationally developed and deployed in 73 countries and fully translated into 15 languages. If a retailer, such as Louis Vuitton, which is one of our customers, wants to have the same solution in every store, every brand and every country, that is something where Retail Pro is the only solution that is available today.
CEOCFOinterviews: How do you market your services?
Mr. Tomczak: We do some advertising, but primarily we have close relationships with industry consultants. We make sure they are educated in what we are trying to accomplish. We attend the major trade shows. The strongest way to market ourselves is through providing tremendous support and satisfaction for our customers. Much of our new business comes from referrals from current, satisfied customers.
CEOCFOinterviews: Will you tell us about the retail software industry in general?
Mr. Tomczak: The retail software industry in general is broken down into three tiers with the top tier having lots of stores such as Home Depot. In our industry that is dominated by Fidel Software, or a company called RETEK. The other end of the spectrum is the very small retailer. In the U.S. there are about a million-and-a-half retailers with just one store. The small end of the market is now dominated by Microsoft and Intuit; they have very simple packages that do not have near the functionality that we have, but they do fine for most simple business applications. In the middle, which is where we play, is the bulk of the retail industry. The question might be how do you determine a mid-tier retailer? A mid-tier retailer is any retailer that has somewhere around a hundred million in revenue. Its a bit fragmented, although mature. Right now there are a number of players but most of them serve just a segment of the applications that are needed for this group. Meaning there are a handful of providers that provide world-class point-of-sale, and just a few providers that provide merchandising planning, and a few others that provide multi-channel solutions. We have combined the multi-channel merchandising and point-of-sale into one company. We are the only company that provides a true multi-channel, end-to-end offering.
CEOCFOinterviews: Will you tell us about the financial condition of the company?
Mr. Tomczak: We are a public company and it is public knowledge that we experienced a couple of quarters of losses in a row prior to my appointment. We immediately focused on returning to profitability. We cut over three million dollars in costs and we have focused on our core products to increase revenue. Our progress has been considerable. In order to give us adequate run-rates to achieve our goal of profitability, which is a core objective, we completed a financing of seven million dollars in early July. That has helped our working capital substantially. The company has ten million in shareholder equity and has been in business for over twenty-five years. There are close to 10,000 customers, which represent about 60,000 stores. We are in a good financial position, and we have become a very stable company.
CEOCFOinterviews: Are there more sevices that you would like to offer and is there new technology that you would like to develop?
Mr. Tomczak: Right now we are committed to focusing on our three core products. Our development plan is to expand and evolve these three core products. Our focus is not in developing new technology, but in evolving the future and functionality of those three products. In addition, we are working towards bringing the three products to a common multi-platform environment to be developed in the same development environment.
CEOCFOinterviews: In closing, why should potential investors be interested now?
Mr. Tomczak: I think they should be interested for one reason, and that is the stock is a very good value. We were punished by the market for guidance that was given by previous management, which they failed to meet. Now we are at a point where we have refocused the business and its core products. We are ranked very high in customer satisfaction and we have great products. We have great employees with much experience in the three areas. We have a whos who list of customers, some of which have been with us for as many as ten years. The stock is priced low right now and we are well into the process of turning this around into a profitable, growing company. IPI is a good value right now.
"Island Pacific has a product called IPMS, which is a full merchandising ERP for mid-tier retailers. It is one of the most prominent packages in the retail software sector. We compared the applications or Island Pacific to the applications of Retail Technologies International (RTI), and realized the two combined would result in a full multi-channel offering for the mid-tier retailer. The merger was completed in early June of this year. As one company, we are stronger because we have a complete offering for mid-tier retailers -- from the store to the back office; the merchandising suite and direct sales, and catalog marketing. RTI was a global business with customers in seventy-three countries and products fully translated into fifteen languages. Island Pacific now has a ready-made distribution to deliver its products globally. - Michael Tomczak
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