How SOU Inc went from second-hand luxury goods pawn shop to floating on Tokyo Stock Exchange

Japanese second-hand luxury fashion and accessories seller SOU Inc. has enjoyed a successful debut on the Tokyo Stock Exchange. SOU, which is trading on the Mothers Exchange, has a market cap of about 24.5 billion yen.

The company founded by Shinsuke Sakimoto has solved for the pain of finding enough inventory of second-hand Hermes bags, brand-name jewelry, and other luxury items: pawn shops that just acquired this previously used high-end items.

The sale of used luxury fashion and accessories is a thriving industry in Japan, a trend that SOU Inc. has been able to capitalise on by opening and managing pawn shops dedicated only to buying up second-hand merchandise. “We are specialists in purchasing other items; we do not sell them,” Sakimoto, said in a recent interview. “Other companies will open stores to sell the items they buy as an exit. We are B-to-B, so we use auctions to say ‘bye-bye’ to the items in a short amount of time.”

SOU’s founder Shinsuke Sakimoto recently posted profit of 1.14 billion yen (11 million dollars) on sales of 22.7 billion yen for the year ending August. Aimed at going from strength to strength, Sakimoto has taken the company public, counting on SMBC Nikko Securities as the underwriter of the IPO.

Shares of SOU Inc started trading 24 percent higher than IPO price

Shares of SOU opened for trading in Tokyo on Thursday March 22nd at 4,100 yen a share, 24 percent higher than the IPO price of 3,300 yen.

Japan’s resale market for luxury brand goods is worth almost 200 billion yen, according to a government report. As revealed by research reported by Bloomberg, Yahoo Japan Corp.’s auction website is dominant, but there’s plenty of competition. Mercari Inc. became Japan’s first startup unicorn with a marketplace app, and even EBay Inc. is returning to the market.

The company, named after the Chinese character for “thought,” has a network of 57 stores across Japan. They’re stylish, attractive locations where people can sell their used luxury goods in a relaxed atmosphere, highlights ‘Deal Street Asia’.

In the near future, SOU will be opening more stores, funded in part with the sale of 4.9 billion yen worth of shares. The company’s growth, according to Sakimoto, comes from their “ability to round up customers, to purchase the goods, and then sell them off quickly.”

For the current fiscal year ending in August, the company expects sales to increase 31 percent from the year-ago period. The next stop could be another city in Asia. SOU is also considering a location overseas and has previously held auctions in Hong Kong to sell diamonds.

Image:SOU Zipang Store in Osaka Rinku Town, SOU Corporate Webl