Growing up, it seemed that my parents never returned a gift. Later, it became apparent that maybe half the gifts were put to use and the other half were put in a drawer – permanently.
Well, brick and mortar retailers and e-commerce retailers today wistfully long for such simple consumer behavior. However, the purchase-return – often dreaded by both retailer and consumer – has increasingly become common. And it even now has a consultant-sounding term: Reverse Logistics. The COVID pandemic has only made this issue that much more prominent.
Driven by the COVID shutdowns, the rates of e-commerce adoption and growth are historic. It is estimated that e-commerce sale grew 40% in 2020 to reach $840 billion versus $600 billion in 2019. This growth is nearly triple the annual average of 15% achieved since 2010. Online sales accounted for 21% of total retail sales compared to 16% the year before. It is estimated that COVID-related buying shifts added $150 billion to online sales.
As online sales grow, there is an inevitable downside: more merchandise is getting returned, which increases costs and operational complexities. According to various studies, approximately 8% to 10% of purchases made in store are returned. However, this range grows dramatically to 25% to 30% for purchases made online. Such return rates vary among product categories, but apparel and footwear see the most returns, which are estimated to be as high as 40%. For the Holiday period alone, it is estimated that $71 billion of online purchases will be returned out of $235 billion of sales.
The rate of returns is high for several reasons. One, retailers are encouraging purchases by being more accommodating with returns through free return shipping and expanding return windows. The likes of Amazon and Zappos have made free returns table stakes. Two, “bracketing” is becoming more commonplace where a consumer buys an item in various sizes and colors, but expects to keep only one item. Three, there are many consumers new to online shopping, who are less experienced in making purchases that will meet their expectations.
The most common reason for returns is poor quality. In descending order, other reasons include a purchase mistake, buyer’s remorse, a lower price found elsewhere, a gift return and the wrong size.
Adding to the cost of returns, only half of items are resold at full-price, and much of this requires repackaging and refurbishing. As much as 25% of items are thrown away, and the rest goes to various liquidation channels. Further in these times of COVID, returned items are typically sealed and stored separately after employees wearing PPE have disinfected them.
In the battle against returns, the best tactic is guiding the consumer to the right purchase the first time. This means bridging the offline-online gap with authentic reviews and ratings and using realistic photography and videos that may be augmented by user-generated content. Also, virtual technology is starting to make a difference.
In spite of the various costs, the wise retailer knows that the return process is an opportunity to win over a customer. Studies show that typical customers will not buy from an online site after having a poor experience with a return. However, a retailer can increase customer retention and loyalty through a positive return experience. In fact, consumers who return purchases are more likely to be repeat customers.
Psst, here’s a start to a happy return – make the label easy to print.
Headlines of the Week
Petco aims to raise more than $800M in IPO
As Petco heads toward an initial public offering, it plans to list its 48 million shares on Nasdaq at $14 to $17 a share, which would raise up to $816 million and make overall valuation in the range of $4 billion, according to a securities filing. After the IPO, the company would be controlled by its current private equity sponsors, CVC Capital Partners and the investment arm of the Canadian Pension Plan, which will own a majority of the voting shares in Petco. Much of the proceeds from the IPO will be used to pay down Petco’s debt, according to the filing. The specialty pet retailer said it plans to be listed on the Nasdaq under ticker symbol “WOOF,” but has yet to determine the price or number of shares to be offered, according to a company press release. Petco went public twice before, in 1994 and 2002. It filed IPO papers in 2015, but was instead sold to its current owners, private equity firm CVC Capital Partners and the Canada Pension Plan.
Apparel & Footwear
Partners Group acquires leading healthcare apparel company Careismatic Brands
Partners Group, the global private markets investment manager, has acquired Careismatic Brands, a leading designer, marketer and distributor of branded medical apparel globally, on behalf of its clients. The Company was acquired from New Mountain Capital, an alternative investment manager. Careismatic is an omni-channel manufacturer and seller of medical apparel, corporate identity apparel, school uniforms and adaptive clothing through various retail and online marketplaces, as well as catalogs, serving customers across all segments. Marketed under a portfolio of 15 well-known brands, including Cherokee Uniforms, Dickies Medical, Infinity, HeartSoul and Scrubstar, Careismatic creates fashionable, comfortable and professional uniforms and sells them in 70 countries across the world. The Company has more than 730 employees with operations in the US, Canada, Europe, and Asia. Partners Group was formerly a shareholder of a predecessor entity of Careismatic, Strategic Partners, Inc., and therefore has a deep understanding of Careismatic’s business.
Platinum Equity Takes Controlling Stake in Mad Engine
It was announced on Jan. 4 that Platinum Equity, a Los Angeles–headquartered investment firm, acquired a controlling stake in Mad Engine, a San Diego–based apparel and accessories company that designs, produces and distributes licensed, branded and private-label products. The announcement did not disclose the terms of the deal; however, it noted that Mad Engine’s existing shareholders would continue to hold “meaningful equity interest.” Current Mad Engine management will continue to run the company. The deal comes a few years after Mad Engine’s buying spree, in which it acquired several prominent apparel companies and brands. In May 2018, Mad Engine acquired Neff Headwear, an 18-year-old skateboard and snowboard headwear company whose goods had been sold at retailers such as Zumiez. The same year, it also acquired Mighty Fine, a Los Angeles–headquartered brand that primarily makes kids’ and juniors clothing.
Fashion Medical Scrubs Label FIGS Hires CFO from Domino’s Pizza
FIGS, a fashion medical-scrubs label headquartered in Santa Monica, Calif., gained notice for selling stylish medical uniforms to healthcare professionals with a direct-to-consumer model. On Jan. 6, it was announced that Jeffrey Lawrence, who helped to develop and also helmed the digital business for Domino’s Pizza, would join FIGS as its new chief financial officer. Said FIGS Co–Chief Executive Officer Trina Spear, “Over his 20 years at Domino’s, Jeff helped completely transform the company and disrupt the entire pizza industry. Domino’s did that by improving the customer experience, investing in technology and expanding globally. That is exactly what we are doing at FIGS as we revolutionize a really antiquated industry, not only through products that healthcare workers love but also through a customer-friendly e-commerce platform.” FIGS recently expanded into activewear, outerwear, accessories and limited-edition collaborations with New Balance. Spears said that the label would be considering mounting a campaign for an initial public offering in the next two years.
Sequoia Capital China Acquires Controlling Stake in AMI
Sequoia Capital China has concluded its acquisition deal with AMI with a majority stake in the brand. Founder and Creative Director, Alexandre Mattiussi, and managing director, Nicolas Santi-Weil have both ensured design and artistic brand continuity as both leadership heads will retain their respective positions at the company. Sequoia Capital China’s strategic investment in one of France’s most promising fashion houses. The investment partnership is an obvious advantage for the French brand to grow and develop a loyal consumer base in the lucrative Chinese market. Seeing that the Chinese market is still the largest driver of growth in the luxury fashion industry, Sequoia’s Shen Nanpeng said, “We will help the brand quickly achieve digital transformation and penetrate deeply into the local market.” Following Lanvin‘s acquisition by Chinese investor Fosun International in 2005, the deal between Sequoia and AMI marks the latest Paris runway brand to take on a Chinese investor as its major stakeholder.
Athletic & Sporting Goods
BoxUnion Acquires Title Boxing Club
BoxUnion, Santa Monica, California, has acquired Title Boxing Club, Overland Park, Kansas, according to an announcement from the companies. Terms of the transaction were not disclosed. Founded in 2016 by Todd Wadler and Felicia Alexander, BoxUnion has three studios and a digital subscription service that started in April 2020. Title Boxing has 166 clubs across the United States, Mexico and the Dominican Republic specializing in boxing and kickboxing classes. The company has another 130 clubs in development. The transaction was backed by Kwanza Jones and José E. Feliciano Supercharged Initiative (KJSI), which is BoxUnion’s lead investor, plus other existing shareholders.
Seawall Capital Acquires Kent Water Sports Holdings
Seawall Capital has acquired Kent Water Sports Holdings. Founded in 1959 and based in New London, Ohio, Kent Water Sports is a diverse platform of action sports brands with a broad product set spanning personal flotation devices, wakeboards, water skis, towable tubes, snowboards and more. The Company’s portfolio of more than 15 iconic brands comprises industry- leading names such as HO/Hyperlite, Connelly, O’Brien, Liquid Force, Onyx, Aquaglide, Barefoot/Fatsac and Arbor Snowboards (managed by agreement with the Arbor Collective), which have all contributed to the Company’s long-term success in serving a broad base of action sports participants of all ages and skill levels.
Malibu Boats, parent company of Pursuit Boats, acquires Maverick Boat Group
Malibu Boats has acquired Maverick Boat Group in a $170 million deal that affects some of the largest boatbuilders not only on the Treasure Coast, but in the U.S. Malibu intends to expand Maverick’s Fort Pierce manufacturing plant “sooner rather than later” and will retain Maverick CEO Scott Deal, who founded the company in 1984 and lives in Vero Beach. Maverick manufactures four lines: Maverick and Hewes flats fishing boats; Pathfinder bay boats; and Cobia center consoles ranging from 17 to 35 feet in length. Pursuit manufactures center consoles and dual consoles between 23 and 42 feet in length. Malibu, a ski-boat manufacturer, acquired Pursuit in fall 2018.
Cosmetics & Pharmacy
Centric Brands Acquires Taste Beauty
Centric Brands has acquired Taste Beauty, a manufacturer and marketer of children’s and adult beauty and personal care products. The acquisition augments Centric Brand’s Kids and Licensed Entertainment portfolio and illustrates the company’s strategy to aggressively grow its core business verticals. The acquisition also further deepens Centric Brand’s relationships with its licensors, vendors and retail partners as it grows Taste Beauty’s business along with its own beauty division across all areas of design, manufacturing, marketing and distribution. Taste Beauty will be part of Centric Brands’ Entertainment Licensing Group.
The Ordinary’s China Distributor, SuperOrdinary, Gets Investment From ACG
Alliance Consumer Growth has made a minority investment in SuperOrdinary, a company that specializes in helping U.S.-based beauty brands expand into China. SuperOrdinary was started by Julien Reis, an industry veteran and the cofounder of Skin Laundry. The distribution business has about 200 employees based in the U.S. and China who work closely with brands to launch into the Chinese market, online and in stores. The business has worked with Drunk Elephant, Olaplex, Farmacy, Supergoop and The Ordinary, as well as ACG-backed brands Ouai Haircare and Milk Makeup. Reis said business was up 400 percent in the last year, and he expects the business to at least double for 2021, and grow to about 350 employees. The business is also backed by the Puig family.
Walgreens Boots Alliance’s Q1 results beat expectations
With 5.7% revenue growth and solid growth in its American retail pharmacy operations, Walgreens Boots Alliance beat Wall Street expectations with its first-quarter earnings. Despite the growth, the company, which posted sales of $36.3 billion for the quarter, swung to a net loss of $308 million — which it said was entirely the result of a $1.5 billion charge from its equity earnings in AmerisourceBergen. Loss per share came out to 36 cents, compared with 95 cents per share in earnings in the prior-year period. Stefano Pessina, WBA’s executive vice chairman and CEO, touted the company beating expectations and the recent progress the company has made in its strategic priorities with the sale of Alliance Health to AmerisourceBergen and the expansion of the investment in VillageMD to support the opening of 600 to 700 Village Medical at Walgreens primary care clinics in the United States.
Kim Kardashian’s KKW Beauty Line Closes $200 Million Deal With Coty
Kim Kardashian West just made a major business deal. In an agreement that was finalized on Tuesday, the 40-year-old reality star sold 20 percent of her KKW Beauty company to Coty for $200 million. “I’m so proud of how the KKW brand has grown over the past four years, and I look forward to working with Coty for the next phase of innovation, advancement, and the ability to bring new launches to customers all around the world,” Kim said in a press release. Through the deal, which was announced in June 2019, fans will see Kim’s company branch out to new areas, including a skincare line slated for a 2022 release, as well as further development of her existing products. Kim and her team will remain the creative visionaries for the brand, while Coty will focus on product development with forays into haircare, personal care and nail products.
Discounters & Department Stores
J.C. Penney revamps activewear private brand as the category surges
J.C. Penney on Thursday unveiled a new iteration of its Xersion activewear line for children, women and men, using performance fabrics and available in inclusive sizing. The assortment is available now in stores and online, priced between $12 and $70, according to a company press release. The revamp of Xersion, initially launched in 2008, is the first of similar efforts planned for this year, the company said. It follows changes and launches of other private labels last year, including its Stylus apparel and Linden Street home brands.
Macy’s continues downsizing effort with 45 more store closures
Macy’s on Tuesday said that 45 more stores will permanently close, most early this year, as part of a plan announced a year ago to close 125 over three years. The department store will likely finish sooner, considering that, with 29 shut down last year, it’s more than halfway done. As of the third quarter 2020, the company ran 544 Macy’s stores, 54 Bloomingdale’s stores and 166 Bluemercury stores. A list of the locations and banners to close will be released later on Wednesday, according to a Macy’s spokesperson; several Chicago news outlets on Tuesday reported that the Water Tower Place store on Michigan Avenue is among them. “As previously announced, Macy’s, Inc. is committed to rightsizing our store fleet by concentrating our existing retail locations in desirable and well-trafficked A and B malls,” the spokesperson said by email.
Tuesday Morning exits bankruptcy
Tuesday Morning has exited Chapter 11 bankruptcy with new debt financing and a planned rights offering for shareholders, the company said in a press release Monday. The off-price retailer leaves bankruptcy with a footprint of 490 stores, down from the 687 stores it operated when it filed for bankruptcy last May. Supporting its exit is a $110 million lending facility backed by J.P. Morgan, Wells Fargo and Bank of America. It also plans a rights offering worth $40 million available to current shareholders and investment firm Osmium Partners, according to securities filings.
Dollar stores got aggressive as the rest of retail hunkered down, and Wall Street likes the strategy
Analysts say Dollar General and Dollar Tree have room to run in 2021, despite their strong sales gains and stock performances during the coronavirus pandemic. Dollar stores, especially those that sell food, “tend to do well during times of economic uncertainty,” said Michael Lasser, a retail analyst for UBS. Dollar General is expanding a new store concept and pressing ahead with aggressive expansion plans for its primary banner. Dollar Tree is adding higher-priced merchandise to many of its stores and could pick up sales as consumers can resume social gatherings and parties.
Emerging Consumer Companies
P&G terminates plan to acquire razor startup Billie following FTC startup
Procter & Gamble will not acquire women’s beauty products startup Billie, as previously planned, following action taken by the U.S. Federal Trade Commission to stop the deal from proceeding. In December, the FTC sued to block P&G’s acquisition of the New York-based startup Billie, a maker of women’s razors and other beauty products, on the grounds that the merger would eliminate competition in the wet shave razor market. P&G and Billie issued a joint statement, expressing their regret over the FTC’s decision to attempt to block their merger, which led to the deal’s termination: We were disappointed by the FTC’s decision and maintain there was exciting potential in combining Billie with P&G to better serve more consumers around the world. However, after due consideration, we have mutually agreed that it is in both companies’ best interests not to engage in a prolonged legal challenge, but instead to terminate our agreement and refocus our resources on other business priorities.
Resident secures $130 million investment to facilitate growth
Resident, the parent company behind bedding brands Nectar, DreamCloud, Level Sleep and Awara, has secured an investment of $130 million to help execute the company’s growth plan, expand its brick-and-mortar retail footprint and strengthen its supply chain and infrastructure. Ion Crossover Partners and Nexus Capital Management led the investment with participation from Baron Capital Group. The funding round follows a year of sales growth for Resident. The company said sales increased more than 100% compared with 2019, and last year it grew its retail presence with brick-and-mortar sleep retailers in the U.S. In addition to its bedding brands, Resident owns home brands Wovenly and Bundle.
Grocery & Restaurants
Flynn Restaurants to buy NPC’s Pizza Hut and half of its Wendy’s
NPC International, a major Wendy’s and Pizza Hut franchisee which declared bankruptcy last summer, has agreed to sell its restaurants and other assets to Flynn Restaurant Group and Wendy’s parent company in two separate transactions, NPC said Thursday. The combined purchase price of the two transactions is around $801 million. If the sales are approved, Flynn, which already is the country’s largest franchisee in terms of sales, would buy all of NPC’s Pizza Hut locations — more than 925 units — and around 225 of its approximately 383 Wendy’s units, as well as NPC’s shared services assets. Wendy’s International LLC would purchase the other Wendy’s restaurants and assign the right to buy them to five current Wendy’s franchisees, according to the agreements. A hearing to approve the two sales is scheduled for Jan. 15.
Peak Rock Capital buys doughnut and kolache franchisor Shipley Do-Nuts
Private investment firm Peak Rock Capital has purchased Shipley Franchise Company and Shipley Do-nut Flour & Supply Co., which together franchise and supply product for Shipley Do-Nuts, a chain of around 300 units based in Houston and specializing in doughnuts and kolaches, Peak Rock said Wednesday. Shipley Do-Nuts was founded in 1936 by Lawrence Shipley. His grandson, Lawrence Shipley III, is retiring from the company concurrent with its sale to Peak Rock. Shipley indicated that his family remains an investor in the chain.
Mondelez acquires better-for-you snack maker Hu
Mondelez International, Inc. has acquired Hu Master Holdings, the parent company of better-for-you snack maker Hu Products. Financial terms of the transaction were not disclosed. Hu was founded by Jason H. Karp and siblings Jordan Brown and Jessica (Brown) Karp in 2012 as a high-end New York eatery offering paleo-inspired foods. Using the Hu Kitchen market section as a proof-of-concept consumer packaged goods testing ground, the founders later expanded the company’s vegan and paleo-friendly chocolate products. Hu has developed a brand portfolio of wellness-focused, vegan and paleo-friendly snacks. The business is led by chief executive officer Mark Ramadan, who previously co-founded the Sir Kensington’s condiment brand, now owned by Unilever. Mondelez took a minority stake in New York-based Hu Products through its SnackFutures venture arm in 2019. The investment granted the company a right of first offer to acquire Hu. Following a competitive bid, Mondelez finalized its acquisition of 100% ownership of the brand on Jan. 4.
Capriotti’s buys Wing Zone, creating $150 million company
Capriotti’s Sandwich Shop has acquired Wing Zone, the fast-casual sandwich chain based in Las Vegas said Monday. Wing Zone is also a fast-casual concept. It’s headquartered in Atlanta and specializes in Buffalo wings, which have been a success story during the pandemic as a popular delivery item. The merger creates a company that had more than $100 million in sales in 2020 in 150 markets worldwide, according to a press release from Capriotti’s announcing the deal. There are currently 115 Capriotti’s restaurants, including 18 that were opened in 2020, and 61 Wing Zone restaurants — 31 in the United States and 36 abroad.
Home & Road
Lenox Corp. has acquired flatware company Hampton Forge. The deal covers the entire Hampton Forge portfolio, including the namesake brand as well as Hampton Forge Signature, Tomodachi by Hampton Forge, Skandia and Argent Orfevres. The purchase price was not disclosed. Lenox ended 2020 on a high after being acquired by the private investment firm Centre Lane Partners in October with the vision to become a bigger player in the field, Lenox CEO Mads Ryder told HFN. “It gave us more muscle and bandwidth to acquire a company like Hampton Forge,” he said. Lenox manufactures and markets flatware under the Lenox, Reed & Barton and Dansk brands. Hampton Forge’s flatware falls into Lenox’s core assortment but also expands its distribution reach. “They add a price segment and a range where we are not strong,” Ryder said. Hampton Forge sells to retailers such as Sam’s Club, Walmart and Costco. “That gives us much more levels to play on.”
Luxury crystal maker Baccarat has new owners and could possibly be sold or restructured, according to published reports. A fund group led by Tor Investment Management, a private alternative credit fund based in Hong Kong, has taken control of Baccarat owner Fortune Legend Ltd., WWD reported. Fortune Legend Ltd. is a subsidiary of the Asian financial holding group Fortune Fountain Capital. The fund group owns a 97.1% stake in Baccarat and as part of the agreement, FLL’s shares have been pledged as collateral, according to a report in Fashion Network. Both news outlets, citing a statement from French stock market regulator AMF, reported that the new owners plan to file a mandatory takeover bid for all the Baccarat shares and then delist the company. Baccarat was placed under judicial administration in September, WWD said, and has struggled financially, with revenues down almost 30 percent in reported terms.
Loves Furniture files Chapter 11 bankruptcy
Retailer Loves Furniture filed for Chapter 11 bankruptcy protection on Wednesday, following nearly nine months of financial struggles it faced after trying to rise from the ashes of Art Van’s previous bankruptcy in March 2020. Its filing listed estimated assets of $10 million to $50 million and a similar amount of liabilities spread over up to as many as 200 creditors. The filing comes just over a week after Southern Motion and its Fusion Furniture stationary upholstery subsidiary sued the company for breach of contract due to unpaid bills. In recent months, other sources said they too faced financial challenges with the retailer, forcing some to cut off shipments aimed at supplying the company’s network of stores that are now primarily in the Detroit area. According to its filing, the company was founded on April 2, 2020, by its sole director Jeff Love. On May 8, 2020, it acquired the inventory and assets of 27 Art Van stores purchased from the Chapter 7 estates of Art Van Furniture LLC.
Helen of Troy’s Housewares Q3 Revenues Climb 21 Percent
Helen of Troy Ltd. reported sales in its Housewares segment, which includes Hydro Flask and OXO, increased 21.4 percent in the third quarter ended November 30. Revenues reached $222.4 million, compared to $183.2 million a year ago. Growth was driven by an Organic business increase of $38.8 million, or 21.2 percent, primarily due to higher demand for OXO brand products as consumers spent more time at home cooking, cleaning, organizing, and pantry loading in response to COVID-19, which resulted in increases in brick & mortar, online and international sales. These factors were partially offset by the COVID-19-related impact of reduced store traffic at certain retail brick & mortar stores, a soft back-to-school season due to COVID-19, lower closeout channel sales, and increased competitive activity. Operating income in the Housewares segment was $37.7 million, or 16.9 percent of segment net sales revenue, compared to $42.3 million, or 23.1 percent of segment net sales revenue.
Jewelry & Luxury
LVMH shakes up Tiffany ranks as the ink dries on $15.8B deal
LVMH Moët Hennessy Louis Vuitton on Thursday announced the completed $15.8 billion acquisition of Tiffany & Co. and an immediate shakeup of the American jeweler’s executive and creative leadership. Anthony Ledru, previously executive vice president of global commercial activities at Louis Vuitton and once a senior vice president of North America at Tiffany, has replaced Alessandro Bogliolo as CEO; Bogliolo will leave the company Jan. 22, according to a company press release.
Consumers Don’t Know Gold Problems, but Like “Responsible” Option
Most consumers don’t know about the issues in the gold supply chain, but a significant number said they’d pay extra for certified responsibly mined gold product, according to a new survey by MVI Marketing. The survey tallied 1,015 U.S. respondents, aged 25–50, with a household income greater than $50,000, who have purchased $200 worth of jewelry or more in the past three years. It was cosponsored by the Alliance for Responsible Mining (ARM) and Rio Grande.
US Suspends Planned Tariffs on French Luxury Goods
The US has suspended plans to impose tariffs of 25 percent on French luxury goods, due to take effect this week in response to France’s tax on big tech companies like Facebook and Amazon. The US Trade Representative (USTR) threatened to impose the tariffs last year following France’s decision to impose a 3 percent levy on certain revenue from big technology companies. A list of imports from France worth $1.3 billion would have been subject to the additional 25 percent tariff. The list included beauty products like lip and eye makeup preparations as well as handbags with an “outer surface of reptile leather,” according to a statement on the US Trade Representative’s website posted in July 2020.
Tiffany Posts Record Holiday Sales Citing Online, China Demand
US jeweler Tiffany & Co said it reported record sales for the 2020 holiday period as consumers stuck at home shopped more online and shoppers in China spent more on jewelry. The company, which will soon be bought by France’s LVMH , said its overall preliminary net sales rose about 2 percent for the period Nov. 1 through Dec. 31, compared with a year earlier, with e-commerce sales surging more than 80 percent during the period. The 2020 holiday season was unusual as the virus outbreak upended shopping patterns, with more consumers avoiding malls and retail stores and opting to shop online.
Office & Leisure
Big shift for Cary Towne Center as Epic Games buys site for $95M for headquarters campus
The future of the Cary Towne Center has shifted dramatically as Epic Games has acquired the 87-acre site with plans to build a global headquarters campus. The Cary-based video game and software giant confirmed to TBJ it closed on the property on Thursday in a $95 million deal with Turnbridge Equities and Denali Properties, the developers who bought the struggling mall in southeast Cary for $31 million in early 2019 and later unveiled major plans for a massive mixed-use project. The sale comes three months after New York-based Turnbridge and Dallas-based Denali announced plans to break ground in early 2021 on their own plans for the property, which had called for a mixed-use hub, called Carolina Yards, with 4 million square feet of space. What led the developers to sell the site is unclear. Epic’s new plans come after the company, behind the global hit “Fortnite,” raised $1.78 billion in 2020 and now has a valuation of $17.3 billon.
Family Video to close all stores as last-ditch effort comes up short
Family Video is closing all of its remaining stores after foot traffic declines and the lack of new movie releases “pushed us to the end of an era,” President Keith Hoogland said in a statement. The company said on its website that the last day for movie rental was Jan. 6 while stores would remain open until all products are sold. Its website, www.FamilyVideo.com, will stay open and sell branded merchandise and other products. As it managed disruption from the pandemic, Family Video, the last major video rental chain, closed roughly half of its footprint in 2020 as sales declines took their toll. Family Video survived all of its peers, growing even in years following the collapse of other major video chains such as Blockbuster, Movie Gallery and Hollywood Video. That it survived until now was a testament to the company’s pluck and model.
Roblox raises $520 million ahead of planned stock market direct listing
Roblox raised $520 million at a $29.5 billion valuation, an increase of more than sevenfold from its last funding in February 2020, in a financing round led by Altimeter Capital and Dragoneer Investment Group. The online gaming company also said it plans to go public via direct listing. Roblox filed to go public late last year but delayed its debut after DoorDash and Airbnb shares popped out of the gate. By following companies like Spotify, Slack and Palantir, which all used direct listings, Roblox will let existing shareholders and employees sell stock to new investors on day one. It’s one of several ways companies are exploring to reach the public market as an alternative to the traditional IPO, which has been criticized as a handout to new investors at the expense of longtime insiders and employees. In a filing, Roblox indicated it still plans to raise an additional $30 million.
Technology & Internet
Apple’s App Store had gross sales around $64 billion in 2020
Apple’s App Store grossed more than $64 billion in 2020, according to an analysis by CNBC. That’s up from an estimated $50 billion in 2019 and $48.5 billion in 2018, according to the same analysis, suggesting that App Store sales growth accelerated strongly during the Covid-19 pandemic, as people sheltered at home and spent more time and money on apps and games. App Store revenue grew 28% in 2020, up from 3.1% growth in 2019, according to CNBC’s analysis. Apple’s App Store is a core growth area for the company. It is reported as part of Apple’s Services division, which reported $53.7 billion in sales in Apple’s fiscal 2020, which ended in September. The money that Apple makes from its App Store has become a flash point for critics of Apple which argue it has too much power. Apple charges 30% for digital sales through its platform, with a few exceptions. Apple recently altered its fee structure, and now it only takes a 15% cut from companies that generate less than $1 million in the App Store.
Amware Fulfillment buys Moulton Logistics
Amware Fulfillment, a provider of both direct-to-consumer and business-to-business fulfillment technology and services, is expanding its DTC capabilities with the acquisition of Moulton Logistics, a firm that has long specialized in serving the fulfillment needs of online and TV merchants. “Amware customers will benefit from an expanded facility network, greater volume leverage with carriers to lower parcel shipping rates, and access to the significant operational expertise of the Moulton team, which has focused on [business-to-consumer] fulfillment services since 1968,” says Harry Drajpuch, CEO of Amware. Amware also sees Moulton’s expertise as crucial to handling the pandemic-spiked demand for the fulfillment of orders placed by consumers shopping at home via online and TV merchants, Drajpuch says. Amware did not disclose what it has agreed to pay for Moulton or other terms of the deal.
Finance & Economy
Cash in circulation is soaring, and that usually means good things for the economy
The amount of currency in circulation soared last year at a rate unseen since World War II, providing what historically has been a good sign for the economy. Amid a massive influx of cash from fiscal and monetary authorities, total currency in circulation soared to $2.07 trillion by the end of the year, according to Federal Reserve data. That marked an 11.6% gain from a year earlier and was the biggest one-year percentage increase since 1945, as the nation was coming out of the war and the military-industrial complex took hold. A major reason was the $2.2 trillion stimulus bill the government passed in May, along with Federal Reserve digital money-printing that saw the central bank balance sheet swell by more than $3 trillion.
Average Credit Scores Hit Record High As Credit Card Balances Drop
Despite a raging pandemic, widespread unemployment and a fragile economy, U.S. consumers paid more of their bills on time last year, resulting in the largest improvement in personal credit scores in more than a decade. According to Experian’s 2020 Consumer Credit Review, the national average FICO score increased by 7 points last year, to a record 710, a rating that is considered “good” within a 5-tiered scoring system that ranges from 300 to 850, ranking scores from “very poor” to “excellent.” To put the latest move into perspective, Experian said 2020’s larger-than-usual annual increase accounted for one-third of the total improvement in scores seen since 2010, which have inched higher in 9 of 10 years.
Private payrolls post first drop since April as coronavirus spread hits job growth, ADP says
Private payrolls in December contracted for the first time since the early days of the coronavirus pandemic, according to a report from ADP. The decrease of 123,000 provided a sign that the U.S. economy had cooled considerably heading into the end of 2020. Economists surveyed by Dow Jones had been expecting growth of 60,000. December’s decline countered seven straight months of job growth coming out of the massive furloughs instituted in March and April as large swaths of the U.S. economy shut down to combat the Covid-19 spread. At an industry level, the battered leisure and hospitality sector led the cuts with 58,000, as states and municipalities brought back restrictions on indoor dining, while outdoor eating became less practical as colder weather set in.