The Big Story

Ecommerce Spin-Offs: Shortsighted, or Lasting Paradigm?

Marshall Schleifman

On Thursday, Macy’s CEO Jeff Gennette announced that the company hired consulting firm AlixPartners to explore separating its ecommerce and brick-and-mortar stores businesses. While Macy’s has not reached any conclusions about whether to proceed with a separation, activist investor Jana Partners announced last month that it had taken a stake in Macy’s and called for management to undertake this business model reengineering.

If this sounds remarkably familiar, sure enough earlier this year department store operator Hudson’s Bay Company, advised by AlixPartners, executed a similar spin-off that separated into a distinct company from Saks Fifth Avenue. Since the spin-off in March, reports from the company and media coverage have been positive. Despite being a privately-owned company with no disclosure requirements, CEO Marc Metrick has provided public updates clearly intended to reassure all stakeholders from vendors to employees and consumers. While coordination between and Saks Fifth has run smoothly so far, the true test will be whether the two distinct entities can work in concert through the crush of a holiday season and then for

years to come.

Companies that creatively reorganize through transactions such as a spin-off generally describe the separation as enabling different management teams to “create value” by optimizing around narrower strategies. However, the primary purpose of such reengineering is usually to generate quick profits for ownership. Because the markets apply different valuation metrics and ascribe different multiples to ecommerce companies versus traditional retailers, spinning off a smaller, high-growth ecommerce operation from a larger, mature bricks-and-mortar business can instantly create paper profits. In Macy’s case, Jana Partners claims that bifurcating the ecommerce company valued on revenue multiples from the whole of Macy’s valued on EBITDA and income multiples could add billions in equity value. As a public company, Macy’s disclosures and stock exchange listing could provide validation that Hudson’s Bay Company and cannot.

Whether an ecommerce spin-off and the legacy company both will be successful in the long term depends on how the separate entities, which share intellectual property and customers, really coordinate over time. Customers will always perceive and Saks Fifth Avenue as the same retailer regardless of whether they are legally separate entities – they rely on the same brand and brand equity. From a customer’s perspective, if the entirety of “Saks” does not provide as good an experience as Neiman Marcus or Nordstrom, shoppers will vote with their dollars and take their online and in-store business elsewhere, regardless of which entity is the source of their disappointment.

Exploring a spin-off of ecommerce businesses is as old as the internet. Recall the pioneer was Staples, which in 1999 created a short-lived tracking stock for After a little over one year of complexities, merged back into Staples, explaining at the time: “We’ll be able to operate more effectively and efficiently with a unified merchandising team, a unified marketing team and a unified customer support team without the administrative costs that come from operating as separate business units.”

Now over twenty years later, retailers are keen to try again. We will see if today’s market dynamics and the evolution of ecommerce operations can overcome the merchandising, marketing and customer experience challenges inherent in executing two separate – but connected – retail businesses.


Headlines of the Week

Private equity firm CVC Capital to acquire Unilever’s tea business for $5 billion

CVC Capital Partners is acquiring ekaterra, Unilever’s tea business, for $5 billion. Ekaterra’s business has 34 tea brands, including Lipton, Pukka, T2 and Tazo. The business had approximately $2.3 billion in sales in 2020.  CVC Capital Partners has approximately $125 billion in assets under management. Current food company investments in the private equity firm’s portfolio are Deoleo, an olive oil manufacturer; GarudaFood, a maker of beverages, biscuits, confectionery and snacks; Munchy Food Industries, snacks and confectionery; and Vivartia, a processor of dairy products and frozen foods.  In July 2020, Unilever said it was divesting part of its tea business. The company will continue operating its tea businesses in India and Indonesia and remain in its joint venture with PepsiCo, Inc.


Macy’s hires the firm behind Saks’ e-commerce spinoff

Macy’s has hired AlixPartners to explore a strategy to unlock value for investors, CEO Jeff Gennette told analysts on Thursday. That could include splitting its e-commerce from its brick-and-mortar stores, considering that AlixPartners is the firm that worked with HBC’s Saks Fifth Avenue to break up its operations. “We … recognize the significant value the market is assigning to pure e-commerce businesses,” Gennette said. Last month Scott Ostfeld, a partner at Jana Partners, asserted that Macy’s should replicate the Saks separation. The activist investment firm then reportedly took a stake in the retailer and communicated directly with its board.



Apparel & Footwear

SPANX welcomes Oprah, Reese Witherspoon, Bumble founder as new investors

Shapewear company SPANX Inc., on Thursday announced a new list of high-profile investors, including Oprah Winfrey, Reese Witherspoon and Bumble dating app founder Whitney Wolfe Herd. The new investments come after global investment firm Blackstone completed its previously announced majority investment in SPANX at a valuation of $1.2 billion. “I’m thrilled to welcome Oprah Winfrey, Reese Witherspoon, Whitney Wolfe Herd, G9 Ventures and Able Partners as investors of SPANX!” company founder and executive chairwoman Sara Blakely said in a Thursday statement.  Blakely added that Winfrey “was a big reason for SPANX’s early success when she named it one of her iconic ‘Favorite Things’ in 2000.” Blakely founded SPANX in 2000, when she took $5,000 in savings and designed the first SPANX undergarment in her apartment. Blackstone and SPANX intend to have an all-female board of directors, according to the retail company.

Foot Locker names COO as sales grow 13% over 2019

As Foot Locker launched private labels and closed acquisitions in Q3, sales rose 3.9% to $2.2 billion, and increased 13.3% from 2019, while comps were up 2.2%. Net income was down 40% to $158 million, while operating income increased by 10% to $196 million, according to a company press release.  The day before its earnings report, the athletics retailer announced several organizational changes, including the promotion of Frank Bracken to chief operating officer. A new role for the company, Bracken will report to CEO Dick Johnson and oversee global operations, including customer experience, technology and supply chain. Foot Locker has been on the move lately and reported progress on several of its initiatives over the course of the quarter. The athletics retailer closed its WSS and Atmos acquisitions in the quarter and has begun integrating them into the business. Footaction stores are continuing to close or be converted into Foot Locker’s other banners. And the company officially merged its Champs Sports and Eastbay brands about 18 months after integrating the corporate organizations.

Victoria’s Secret Anticipates $100 Million in Supply Chain Disruptions, but Investors Don’t Seem to Mind

Supply chain issues continue to plague the retail industry ahead of the all-important holiday fourth quarter, and Victoria’s Secret is no different. The retailer is anticipating approximately $100 million in supply chain disruptions in the fourth quarter. “So it’s a really big thing,” Martin Water, chief executive officer of Victoria’s Secret Lingerie, told analysts on Thursday morning’s conference call. “To go into the season we ordered around 200 million units of stock and 90 million of those 200 million are delayed. And the delays are between two and nine weeks. In some cases we won’t get the merchandise at all. So all of our plans are being reworked. Ninety percent of our merchandise will come in by air and that doesn’t make it super quick because air in the old days — meaning a year ago — used to be two days. It is now more like nine days. And in addition to that, we have 100 vessels at anchor right now that are not going ashore. And all of that winds up to $150 million of the cost pressure, $50 million of which we recorded in the third quarter, $100 million of which will be in the fourth quarter.”

Fabletics is leaning on college tournaments and athletes to grow its men’s business

The standard way activewear brands get involved with organized sports involves sponsoring a professional or college team, providing jerseys and apparel to players, or licensing merchandise. But Fabletics CMO Ryan Heller felt there was an opportunity to do something different. The activewear brand is sponsoring the Jacksonville Classic, an NCAA men’s college basketball tournament in Jacksonville, Florida starting on November 21. The new name of the tournament will be the Fabletics Jacksonville Classic, and it will feature eight college basketball teams including those from the University of Missouri, Florida State University and Boston University. Fabletics plans to keep the partnership going for several years to come. Heller believes that sponsoring a tournament rather than a specific team is disruptive.

Wells Fargo Leads New Lending Group on The Children’s Place Refinance

The Children’s Place, the largest pure-play children’s specialty apparel retailer in North America, announced the refinancing of its revolving credit facility and term loan by a new lending group led by an affiliate of Wells Fargo. The new debt consists of a revolving credit facility with $350 million of availability and a $50 million term loan, both with five year maturities, lower interest rates, reduced reporting requirements, and increased flexibility under the covenants. The lending group consists of affiliates of Wells Fargo, Bank of America, JP Morgan, Truist, and HSBC. The new revolving credit facility is secured by a first-priority lien on substantially all of the Company’s U.S. and Canadian assets, and a second-priority lien on the Company’s intellectual property, and certain furniture, fixtures and equipment. Interest on borrowings is payable monthly at LIBOR plus 1.125% or 1.375%, based on the amount of the Company’s average excess availability under the facility.  The new term loan is secured by a first-priority lien on the Company’s intellectual property, and certain furniture, fixtures and equipment, and a second-priority lien on the assets securing the new revolving credit facility. Interest is payable monthly at LIBOR plus 2.50%.


Athletic & Sporting Goods

Foot Locker Merges Champs Sports and Eastbay Brands

Foot Locker announced it is officially merging its Champs Sports and Eastbay brands after integrating the corporate organizations for both banners last year.  Dubbed Champs Sports x Eastbay, the combined brand has its own unified logo and aims to position itself in the youth sports market with retail experiences and joint offerings in the coming months. With the launch of the brand, Champs Sports x Eastbay is rolling out an exclusive apparel line with Uninterrupted, an athlete-led media brand that is part of The SpringHill Company, co-founded by LeBron James.  The announcement of Champs Sports x Eastbay follows the debut of Eastbay Performance apparel merchandise and the announcement of Philadelphia Eagles Quarterback Jalen Hurts as the line’s first brand ambassador.

AllTrails raises $150M after COVID accelerates people’s interest in exploring the outdoors

Following a COVID-driven boost, the popular AllTrails resource for hikers, bikers, climbers and anyone else who enjoys the outdoors, announced today it’s raised $150 million from the growth fund of global private equity firm Permira to further accelerate its business. Prior investor Spectrum Equity will continue to be the company’s largest shareholder, following this transaction.  Like many companies, AllTrails benefitted from how the pandemic impacted consumer behavior. Amid lockdowns and social distancing measures, many people rekindled their interest in exploring the outdoors and connecting with nature — and they turned to AllTrails’ extensive collection of over 300,000 hiking, running and mountain biking trails to find where to go.

Cosmetics & Pharmacy

P&G doubles down on skin care with Farmacy Beauty takeover

Procter & Gamble is investing in its skin care portfolio with the acquisition of cult brand Farmacy Beauty.  Founded in 2015 by entrepreneur David Chung, Farmacy touts itself as a ‘farm-to-face’ brand, working with farms around the world to develop innovative ingredients for its skus.  The star ingredient used throughout Farmacy’s range is its patented Echinacea GreenEnvy complex – an antioxidant concoction that helps to firm skin and protect from free radicals. Terms of the deal have not been revealed, and is still subject to regulatory approval. Importantly for P&G, the takeover will refresh its consumer audience, which is generally aimed at an older demographic due to its brand portfolio.  Olay, Old Spice, Head & Shoulders and Herbal Essences are among the brands in P&G’s beauty care category.

Rare Beauty Brands Acquires Dr. Dana Beauty from Nu Skin

Rare Beauty Brands completed its second transaction, acquiring Dr. Dana Beauty from Nu Skin Enterprises Inc. Dr. Dana Beauty, known for its Nail Renewal System, was developed by world-renowned dermatologist and nail expert Dr. Dana Stern. The formulas are scientifically proven and free of harmful chemicals. Established in 2014 and headquartered in Boston, MA, Rare Beauty Brands is a global brand platform that incubates, acquires, and accelerates purpose-driven beauty brands with a current portfolio that consists of Patchology and Plant Apothecary. The acquisition will increase Rare Beauty Brands’ leadership in the beauty industry and expand the brand into a full Nail Care Category Line in 2023. “When I think about a Rare Beauty brand, I think of three pillars: Is it pushing the limits of efficacy and conscious beauty, is it based on an unmet need, and is it really strongly differentiated,” said Chris Hobson, President and Chief Executive Officer of Rare Beauty Brands. “Nail health has historically been an afterthought for color brands. But here, it’s bringing the sophistication of skin care into nail care.”

L’Occitane Acquires A Majority Stake in Sol de Janeiro

L’Occitane Group has acquired a majority stake in Sol de Janeiro. L’Occitane will acquire an 83% indirect interest in Sol de Janeiro, based on a valuation of $450 million. Upon closing, Sol de Janeiro will become a majority-owned subsidiary of the Group. The transaction is expected to close by the end of the year. Sol de Janeiro views L’Occitane as uniquely positioned to accelerate its already explosive growth trajectory, while strengthening the brand’s commitment to sustainability.  The acquisition will allow the Sol de Janeiro brand vision and team to remain intact, while leveraging L’Occitane’s international presence. Heela Yang, Chief Executive Officer and Co-Founder of Sol de Janeiro, comments, “It’s been my dream to reach all corners of the globe…I have always admired L’Occitane, a beautiful lifestyle brand anchored in their deep commitment to sustainability, and we are thrilled to have found a home…” Yang will remain in her role as CEO, rolling over a significant amount of her equity to continue to drive growth.


Discounters & Department Stores

Kohl’s enjoys some upside from inventory scarcity

Revenue at Kohl’s was up 15.6% year over year to $4.6 billion in the third quarter, with comparable sales up 14.7%, according to a press release. Gross margin was up more than four percentage points from Q3 last year, while operating income grew more than seventeen-fold. In a presentation, Kohl’s said its inventory turn reached a 10-year high. While the company touted its inventory discipline, CEO Michelle Gass noted to analysts that inventory levels for the year remain below what the retailer has planned for, according to a Seeking Alpha transcript.

Walmart maintains growth in Q3 as inflation takes hold

Walmart’s sales continue to grow ahead of the holidays due to strong consumer spending, the rising cost of consumer goods and government stimulus. U.S. sales grew 9.3% year over year in the third quarter to $96.6 billion, with domestic comp sales (excluding fuel) up 9.2% and U.S. e-commerce sales up 8%. Sam’s Club comp sales (excluding fuel) increased 13.9%, and e-commerce sales rose 32%. The retailer won market share in grocery in the U.S. amid the highest inflation level in 30 years. Sales growth for the category increased nearly 10%, with low- to mid-single-digit ticket inflation benefiting results.

Target addresses out-of-stock fears, raises holiday sales outlook

Amid a widespread supply chain crunch, Target executives said they “feel good” about their inventory levels leading up to the holiday season. Target’s inventory in Q3 increased by over $2 billion compared to last year. Similar to recent quarters, traffic was the primary driver of Target’s growth in the third quarter with comparable sales up 12.7% on top of last year’s 20.7% growth. Store comparable sales increased 9.7%, while digital comp sales rose 29% following last year’s 155% uptick. Alongside the Q3 results, Target raised its outlook for the fourth quarter to high-single-digit to low-double-digit growth. The retailer previously expected a high-single-digit increase.

Nordstrom employs drop-ship model in new Fanatics partnership

Nordstrom on Thursday announced a tie-up with Fanatics, employing the drop-ship model the department store announced earlier this year. That entails handling sales and Fanatics fulfilling and shipping orders, according to a press release. The “long-term” partnership brings Nordstrom “an entirely new product category,” with licensed products from major sports leagues featured in a new Sports Fan Shop. Merchandise for men, women and children includes brands like Fanatics, Nike, Adidas and Mitchell & Ness, the companies said.

Reese Witherspoon’s Draper James to partner with Kohl’s

Kohl’s on Tuesday announced that it has partnered with Draper James, a brand owned by actress Reese Witherspoon, according to a company press release. Draper James RSVP, an exclusive capsule collection for Kohl’s, is set to debut in February 2022. Draper James RSVP will consist of dresses, blazers, bodysuits, blouses, cardigans, skirts, rompers and capris. The collection will be offered in 500 Kohl’s stores, with an “expanded presence” adjacent to Sephora at 300 of its locations, and on the retailer’s website.


Emerging Consumer Companies

Daily Harvest Raises Series D

Daily Harvest, the online food platform built around real fruits and vegetables, announced that it had raised a Series D round, valuing the company at over $1 billion. The round was led by Lone Pine Capital with existing company investors. Launched in 2016, the company plans to use the investment to advance the company’s mission and make organic and regenerative fruits and vegetables more accessible across the country.

JuneShine, hard kombucha brand, raises $24 million

JuneShine, a San Diego-based maker of better-for-you hard kombucha, raised $24 million in a second round of funding led by Amberstone Ventures and Litani Ventures, the principals behind RXBAR. Founded in 2018 by Greg Serrao and Forrest Dein, JuneShine will use the money to increase production at its 30,000-square-foot Scripps Ranch brewing operation. The company also plans to bring on additional personnel and increase its marketing spend.

Gooder Foods, maker of better-for-you macaroni and cheese brand Goodles, raises $6.4 million

New macaroni and cheese brand Goodles launched last week after its parent company, Gooder Foods, raised $6.4 million to carve out a niche in the $4.4 billion dry noodles category. According to the brand, the food is high on the list of comfort foods, but has been advertised specifically to children for decades, despite the fact that 59% of adults eat at least one noodle dish each week. The $6.4 million investment combines a seed round and convertible note and will be poured into efforts to market to consumers, build inventory, and develop branding and marketing. Investors backing the company include Springdale Ventures, Willow Growth Partners, Third Craft, Gingerbread Capital, Purple Arch Ventures and First Course Capital, along with a group of individual investors.



Food & Beverage

Anheuser-Busch buys alcoholic beverage brand Hoop Tea

Anheuser-Busch purchased Hoop Tea, a Maryland-based beverage company known for its tea-infused malt beverages and seltzers.  Hoop Tea will be led by founder and CEO Danny Robinson, who has joined Anheuser-Busch. Terms of the deal were not disclosed.  In response to declining beer sales, Anheuser-Busch launched its Beyond Beer portfolio.  Hoop Tea will join this portfolio which includes brands such as Cutwater Spirits, Babe Wine and Bon & Viv Spiked Seltzer.  The Beyond Beer segment generated over $1 billion in revenue for Anheuser-Busch over the last three years.

Sesame milk brand Planting Hope completes IPO

Plant-based brand The Planting Hope Co. has completed its IPO in Canada, selling 22.5 million shares at a price of $0.40 each. The shares began trading on the TSX-V on November 18, under the ticker symbol “MYLK”.  Planting Hope is notable for having an all-female C-Suite and Board. It is the first company of this kind to go public in Canada, and one of very few globally.  The Company’s flagship product is Hope and Sesame, which it claims is the first commercially available sesame milk worldwide. The milk is made from the upcycled byproduct of sesame oil production, making it highly nutritious and sustainable. Hope and Sesame is available via major distributors UNFI and Kehe, as well as retailers Kroger, Sprouts, Whole Foods Market Canada, and Amazon.

PlantPlus Foods to Acquire Sol Cuisine and Hilary’s

PlantPlus Foods, a joint venture launched by Archer Daniels Midland (ADM) and Brazilian beef processor Marfrig last year, announced last week it has entered into agreements to acquire two plant-based protein companies: Sol Cuisine and DEW Drink Eat Well, owner of Hilary’s.  The Sol Cuisine deal, coming just six months after the company went public on the TSX Venture Exchange, is valued at $100 million and is set to close in the first quarter of 2022. Terms of the Hilary’s deal were not disclosed.  Sol Cuisine and Hilary’s are PlantPlus Foods’ first acquisitions and will mark its entrance into North America, currently marketing a line of PlantPlus Foods-branded products in Brazil.


JBS to acquire cultivated meat company in $100m investment

Brazil’s JBS — the world’s largest meat processor — plans to acquire a majority stake in Spanish cultivated meat company BioTech Foods as part of a $100 million investment into the nascent sector, Reuters reports. Of that total, $41 million will go towards construction of a manufacturing plant in Spain which could produce up to 1,000 tons of cultivated meat per year, according to Brazilian financial newspaper Valor. Some of the capital will also be deployed to build an R&D center in Brazil focused on cell-cultured meat. Several other ‘Big Meat’ companies have invested in plant-based protein startups, but have been slower in backing cultivated meat makers. Among those to have taken minority stakes in cell-cultured meat startups are BRF, Cargill, CJ CheilJedang, and Thai Union, which participated in in the $105 million Series B funding round that Israel’s Aleph Farms raised in July.



Grocery & Restaurants

Sweetgreen IPO shares soar 76% on first trading day

Sweetgreen Inc.’s initial public offering began trading Thursday, closing at about 76% above its pricing of $28 a share. The Los Angeles-based fast-casual brand’s stock opened at $52 a share Thursday afternoon and traded in a range of $46.01 to $56.20 a share. Shares closed above $49, up about 76%. In the 12 months ended Sept. 26, the company in its SEC S-1 filing said it had average annual unit volume of $2.5 million and annualized revenue of $303 million. Jonathan Neman, Sweetgreen co-founder and CEO, said Thursday in an interview on CNBC’s “Squawk Box,” that the company is not yet profitable. But Neman said Sweetgreen has invested in technology to make its food accessible, convenient and frictionless. He added that Sweetgreen sees itself building “the McDonald’s of our generation, so eventually we want it to be everywhere, but we’re taking a disciplined approach and how we get there.” Sweetgreen, founded in 2006, has 140 units in 13 states and the District of Columbia.

Restaurant Brands International to acquire Firehouse Subs for $1 billion

Restaurant Brands International, which owns Burger King, Popeyes and Tim Hortons, announced Monday that it will acquire quick-service chain Firehouse Subs for $1 billion in an all-cash deal. Founded in Jacksonville, Fla., in 1994, Firehouse Subs has over 1,100 locations, 97% of which are franchised, in 46 states, Canada and Puerto Rico. As of October, year-to-date U.S. same-store sales at Firehouse Subs were up 20% over 2019, according to the company. Between RBI’s three current brands, the company has more than 27,000 restaurants in more than 100 countries, with more than 10,000 of those in the U.S.



Home & Road

Mattress maker Casper to be taken private by PE firm Durational Capital Management

Casper Sleep announced that it will be taken private by private equity firm Durational Capital Management in a deal that values the mattress maker at a roughly 94% premium to last Friday’s closing price. Casper’s stock finished last Friday at $3.55 per share. Durational Capital has agreed to pay $6.90 for each Casper share outstanding, the company said in a press release. Casper shares shot up more than 85% in afternoon trading Monday following the news. “This agreement offers a promising opportunity to realize the highest value for our stockholders while providing Casper with much needed capital to execute on future initiatives to sustain and grow its business,” said Casper co-founder and CEO Philip Krim. He said the company had been talking to outside advisors and Casper’s board for several months to evaluate a range of financial alternatives, before deciding this one was the best choice. Casper’s board unanimously supports the offer from Durational and recommends shareholders approve the transaction, Krim said. The deal is expected to close in the first quarter of 2022. When Casper went public in February 2020, the company priced its IPO at $12 per share and started trading on the New York Stock Exchange at $14.50, nabbing a valuation of about $575 million.

Home Depot earnings blow past estimates; sales rise 9.8%

The Home Depot reported strong third-quarter earnings and sales as consumers spent more money on fixing up their homes. The home improvement giant’s net income rose to $4.13 billion, or $3.92 a share, in the quarter ended Oct. 31, up from $3.43 billion, or $3.18 a share, in the year-ago period. Analysts had forecast earnings per share of $3.42. Net sales increased 9.8% to $36.82 billion, easily topping estimates of $34.95 billion. Same-store sales grew 6.1%, well ahead of the 2.4% growth analysts had expected. U.S. comparable sales rose 5.5%, also more than expected. Customer transactions fell by 5.5% to 428.2 million. But the average purchase rose 12.9%, to $82.38. A similar scenario played out in Home Depot’s second quarter as customer transactions dropped 5.8% but the average ticket increased 11.3%. Second-quarter sales per square foot increased by 6.2%.

Williams-Sonoma reports record Q3

Williams-Sonoma Inc., a leading digital-first, design-led and sustainable home retailer, reported third quarter revenues that were up 16% over the same period last year. For the quarter ended Oct. 31, net revenues for the company were up to $2.05 billion, bringing the revenue increase to 41.3% over the same period in 2019. “Our performance demonstrates that we can continue to take share in a fractured market, and deliver high-quality, sustainable earnings,” President and CEO Laura Alber said in an earnings release. “As a result, we are raising our full-year outlook to reflect revenue growth of 22% to 23% and operating margins of 16.9% to 17.1%.” E-commerce revenue accelerated to 67% of total company revenues, and comparable brand revenue growth was led by West Elm at 22.5%, followed by Pottery Barn Kids and Teen at 16.9%, Pottery Barn at 15.9% and Williams Sonoma accelerating to 7.6%. Net income for the quarter was $249.4 million, with diluted earnings per share of $3.29, up from $201.7 million and EPS of $2.54 in the year-ago period.

Jewelry & Luxury

Signet Completes Purchase of Diamonds Direct

Signet Jewelers has completed its acquisition of Diamonds Direct, the 22-store chain it announced it would buy in October. Signet agreed to pay $490 million for the company, which reflects approximately a 1.1 multiple on annualized revenue and an approximately 7.1 multiple on annualized EBITDA (earnings before interest, taxes, depreciation, and amortization), it said. That indicates that Diamonds Direct’s annual revenue is approximately $446 million. Diamonds Direct’s mature stores have a median annualized revenue of approximately $18.5 million over the last 12 months, a Signet statement said.

Swarovski Board No Longer Just All In The Family

In what Swarovski is calling a “milestone in [the] company[’s] history,” the crystal company’s board of directors has been reconstituted, so that it now consists of nonmembers of its founding family. In a statement, the company said that “in the past few months, Swarovski has set the course for a more professional group structure and management.… The newly appointed [board] is intended to act as a link to improve interface management between the owner families and the company.”


Rue Gilt Groupe Files For IPO

On Friday, Rue Gilt Groupe, an e-tailer that sells discount designer brand products, including jewelry, filed to go public. The SEC filing argued that the market Rue Gilt Groupe targets has been “underserved” online. “The off-price category has now grown to nearly a $100 billion industry, yet remains largely controlled by brick-and-mortar retailers,” said the filing. “We don’t just produce a sale for our brand partners,” it added. “We produce a show.” Like many e-tailers during COVID-19, Rue Gilt Groupe has shown rapid growth. For the year ended October 2, 2021, revenue increased 28.3% over the prior year to $702.5 million. It claims more than 1 million active buyers.

In First Public Quarter, Brilliant Earth Says Sales Rose 33%

In its first quarter as a public company, Brilliant Earth Group reported a sales increase of 33% for its third quarter of 2021, which ended Sept. 30. Overall sales for the quarter totaled $95.1 million. It also posted net income of $4 million and an adjusted EBITDA of $13.6 million. Its gross margin increased from 43.2% to 50.4%. In a conference call following the release of its financial results, CEO Beth Gerstein said the San Francisco–based e-tailer aims to be the “fine jeweler of choice for millennial and Gen Z jewelry consumers.” She boasted her company has numerous competitive advantages that will help it reach that demo.

Gorjana Expands Retail Footprint From Laguna Beach To Nationwide

With some sunny optimism and a quick expansion into retail stores, California-based Gorjana has gone from jewelry shows to direct-to-consumer to brick-and-mortar locations across the United States with the goal of bringing its Laguna Beach vibe nationwide, its founders say. Part of the Gorjana’s success comes from its array of price points from $38 to $700 for its new fine jewelry collection, says cofounder and CEO Jason Griffin Reidel. But Gorjana also is seeing its customers embrace in-person shopping as a way of connecting to the brand and each store’s beachy ambiance. “Our model is to have something for everyone; you should be able to walk into one of our stores and interact with the brand at any level you want,” Reidel says.


Office & Leisure

Beanie Babies flown from China to O’Hare to circumvent shipping backlogs

With his Beanie Babies stuck at sea aboard a flotilla of slow boats from China, Chicago billionaire Ty Warner has taken to the skies to circumvent the ongoing shipping crisis, booking entire cargo planes to get his signature stuffed animals home for the holidays. Warner, whose Westmont-based Ty Inc. has been manufacturing Beanie Babies in China for decades, has chartered more than 150 flights from airports in Shenzhen, Guangzhou, Shanghai and Hong Kong since October, airlifting the Beanie Babies more than 6,000 miles to O’Hare International Airport. From there, the Beanie Babies are sent to the company’s Bolingbrook warehouse for distribution to retailers around the country. “The widely-reported problems with global supply chains have cast a pall over the coming Christmas. There’s too much doom-and-gloom out there,” Warner said in a news release. “I’m here to tell our customers that, despite what they might have read or heard, Christmas is not canceled.”

Nike teams up with Roblox to create a virtual world called Nikeland

Sports giant Nike has taken a leap into the metaverse. The Beaverton, Oregon, company announced Thursday that it is partnering with Roblox to create a virtual world called Nikeland on Roblox’s online gaming platform. The virtual world includes Nike buildings, fields and arenas for players to compete in various mini-games, ranging from tag and dodgeball to “The Floor Is Lava.” It’s modeled after the company’s real-life headquarters. Nikeland will be free (for now). The company eventually plans to integrate in-play moments that emulate global sporting events. Examples may include a soccer event during the World Cup or a flag football game during the Super Bowl. Nike said it will continue to update the virtual world to include athlete and product integration.  As the metaverse has come to the forefront, companies like Nike see the value in its ability to connect with a new generation of athletes and get them to fall in love with the brand, which can eventually translate into real-world sales.

Technology & Internet

Apple shares hit record, plans to build self-driving car as soon as 2025

Apple shares closed at a record high on Friday following a report that the company is accelerating efforts to launch a self-driving vehicle. According to the full report from Bloomberg News, the company is pushing internally for a 2025 deadline for an autonomous vehicle. Apple’s entry into the electric vehicle space could put the company in competition with Tesla as well as emerging players like Rivian and Lucid Motors and traditional automakers that are moving away from fossil fuels. Morgan Stanley published two notes following the Bloomberg story, and analyst Katy Huberty wrote in one that it’s “the first press report to include a broad number of data points sourced to Apple insiders and provides enough reported detail to potentially lend credibility to the idea that Apple’s Car launch could both accelerate adoption of new technology (EV + AV) and expand the addressable market similar to past Apple product launches.”


Alibaba earnings fiscal Q2: Revenue misses, earnings plunge

Alibaba on Thursday missed revenue and earnings expectations for the September quarter, as slowing economic growth in China weighed on results, adding to regulatory headwinds. The company also slashed its revenue guidance for its current fiscal year. It previously expected to bring in 930 billion yuan, which would have been about 29.5% year-on-year growth. But it now expects growth to be between 20% and 23% year-on-year. Alibaba’s U.S.-listed shares fell 11.1% on Thursday. China’s economy slowed down in the third quarter of the year, which has also hit consumption. Alibaba has also been on the receiving end of China’s crackdown on its domestic technology industry which has seen a slew of new regulation brought in from antitrust to data protection. Alibaba has been facing intense competition from its rival but also newer players like Pinduoduo and even social media companies like TikTok-owner ByteDance.


Finance & Economy

Retail sales rise faster than expected in October even as inflation pushes prices higher

U.S. shoppers accelerated their level of spending in October even as the prices of goods jumped at their fastest pace since the 1990s, the Commerce Department reported.  Retail sales, a measure of how much consumers spent on goods ranging across categories from autos to sporting goods and food and gas, increased 1.7% for October, compared with 0.8% the previous month.  Excluding autos, sales also increased 1.7%, according to the Census Bureau advance estimate.  The two numbers were above the Dow Jones estimates of 1.5% for the headline print and 1% for the core sales gain.  Online shopping posted the biggest relative gain for the month, rising 4% and good for a 10.2% gain from a year ago. Soaring prices at the pump pushed gasoline sales up 3.9% in October. Year over year, sales increases at stations have surged 46.8%.

Surging shipping costs will drive up prices for some consumer products by 10%, new UN report finds

The global surge in container shipping rates could send consumer prices 1.5% higher over the next year, according to a report from the United Nations Conference on Trade and Development.  The rate for a single shipping container has skyrocketed over the last 18 months as the coronavirus pandemic disrupted supply chains and trade channels. Routes have seen costs rise by seven times, if not more.  By country, the U.S. would see consumer prices rise by 1.2%, while China would see a 1.4% increase, the report said. The analysis found that smaller countries more dependent on imports would see consumer prices rise by a much higher 7.5%.  By product, electronics, furniture, and apparel would see the greatest price increases — of at least 10% globally — due to supply chain distribution, UNCTAD said, noting containers account for 17% of total seaborne trade volume.