Headlines of the Week

German sandal maker Birkenstock taken over by LVMH-backed group

The French family behind Louis Vuitton and Christian Dior is to take control of the German sandal maker Birkenstock in a €4bn deal. Financière Agache, the family investment firm of Bernard Arnault, the French billionaire who controls the designer brand conglomerate LVMH, and L Catterton, a private equity firm part-owned by LVMH, has bought a majority stake in the family-owned footwear firm. The value of the deal was not confirmed but is understood to be in the region of €4bn (£3.5bn). Arnault fought off a competing bid from the private equity firm CVC Capital Partners, the owner of dozens of companies, from the motorway services firm Moto to the luxury watchmaker Breitling. Birkenstock said the investment would help it expand in China and India, and fund the development of its website and the expansion of its main German factory in Görlitz.

 

In Largest Deal Yet, Estée Lauder to Acquire Deciem at $2.2B Valuation

The Estée Lauder Cos. Inc. has agreed to buy a majority stake in Deciem, the parent company of popular skin care brand The Ordinary, at a $2.2 billion valuation. Lauder owns a 29 percent stake in Deciem after investing in 2017. Under the terms of the deal, Lauder is paying $1 billion to increase its ownership position to 76 percent. In three years, Lauder plans to buy the rest of the company at a to-be-determined valuation. “It felt like the right time from our people, our brand, our infrastructure. We feel like it’s a time where they can really come in and offer access to different resources that can strengthen where we are today, but we are so strong in our identity and in our culture that it won’t be overtaken by big corporate,” said Deciem chief executive officer Nicola Kilner in an interview. For 2020, Deciem nearly doubled sales, to about $460 million. The bulk of sales come from The Ordinary, known for affordable skin care products including Niacinimide 10% + Zinc 1%, $5.90, and AHA 30% + BHA 2% Peeling Solution, $7.20.

 

 

Apparel & Footwear

L Brands to test private equity firms’ appetite for Victoria’s Secret again: NYT

L Brands’ bankers at Goldman Sachs would begin pitching buyout firms about a potential sale of its Victoria’s Secret lingerie brand as soon as this week, the New York Times reported on Tuesday, citing people with knowledge of the matter. The Columbus, Ohio-based company’s attempt to sell a majority stake in its Victoria’s Secret business to Sycamore Partners collapsed last year after the buyout firm alleged that L Brands breached the terms of the deal. L Brands did not immediately respond to Reuters’ request for comment. Earlier this month, the company said it was aiming to complete the separation of its Victoria’s Secret and Bath & Body Works businesses by August, with options including a spin-off of the former into a public company or a private sale of the business.

Crocs became a pandemic staple, but CEO Andrew Rees optimistic its new fans will stick around

Some have called Crocs the “it” shoe of the pandemic, as the clog became a closet staple for consumers seeking comfort during their more casual pandemic lifestyle. The popularity helped push Crocs to stunning sales gains in its latest quarter, “The pandemic has allowed us to reach new customers, but I think consumers are also focused on what we can offer them in the future,” Crocs CEO Andrew Rees told CNBC’s “Power Lunch.” Rees said he remains optimistic that the brand can grow with the help of product innovations, such as introducing new sandals to its portfolio. He also noted that the footwear brand was trending even before the pandemic, putting them in a good position when Covid-19 hit. “Sandals is a large product category and the accessible market for us around sandals is about $30 billion globally,” said Reese. Crocs said it expects revenue to rise 40% to 50% in the first quarter, and between 20% to 25% for the full year.

Gap to invest $140 million to build Texas warehouse as online sales swell

Gap said Wednesday it will invest $140 million to construct a distribution center in Longview, Texas, as part of its effort to double its online business over the next two years. Upon completion, Gap said the 850,000-square-foot facility will be able to process 1 million packages per day. Initially, it will be used for Old Navy’s burgeoning e-commerce business, then expand to other parts of Gap’s business. Gap expects the facility will create more than 500 full-time jobs by the end of 2023, and more than 1,000 over the next five years. It also should bring more than 1,000 part-time and seasonal jobs to the area by 2026. Construction will begin in April. Gap expects it to be fully operational by August 2022.

Outdoor Voices taps Urban Outfitters exec as CEO

Outdoor Voices has a new leader. The outdoor and activewear brand announced that Gabrielle Conforti has joined the company as CEO. She spent the last six years at Urban Outfitters, most recently serving as chief merchandising officer and president (she was named to the latter one month ago). Conforti is credited with launching and revitalizing new category businesses at Urban Outfitters, including home, beauty, wellness and active. Prior to Urban Outfitters, from 2006 to 2010, Conforti was with J. Crew where she oversaw the merchandising and buying across multiple categories. At Outdoor Voices, Conforti will be focused on making new products, doubling down on the brand’s community focus and building its future vision.

 

Athletic & Sporting Goods

FDA approves new device to help protect athletes from traumatic brain injury

A new device that could help reduce the risk of traumatic brain injury during head impacts was given the green light by the Food and Drug Administration. The device is authorized for athletes 13 and older, and can be used during football, soccer and other high-impact sports.  The C-shaped device, called the Q-Collar, fits around the back and side of the neck. It works by clamping down on blood vessels in the neck, which increases blood volume in the skull. This limits the movement of the brain inside the skull, which researchers believe generally causes traumatic brain injury.  The FDA said it based its recommendation on a number of studies, including one that compared changes in brain structure between high school football players who wore the Q-Collar versus those who did not.  The researchers used advanced imaging techniques to look at changes in the brains of nearly 300 study participants before and after the season. They found changes in deep structures of the brain in 73% of participants in the no-collar group, while no significant changes in these same structures were found in 77% of participants in the collar group.

 

Under Armour cuts its sponsorship commitments in half

Under Armour Inc. shed almost half of its sponsorship commitments last year as the sportswear maker exited several major contracts to cut back on costs during the Covid-19 pandemic.  Baltimore-based Under Armour reported $361.6 million in sponsorships with professional teams, professional leagues, colleges and universities, individual athletes, athletic events and other marketing commitments as of Dec. 31, according to the company’s annual financial filing with the U.S. Securities and Exchange.  Those commitments represent a 47% reduction from $679.1 million in sponsorship obligations Under Armour reported a year ago.  The company terminated several major sponsorship deals and other contracts last year as part of a restructuring plan expected to cost the company $550 million to $600 million in pre-tax charges.

 

Reckitt Benckiser to acquire Biofreeze brand

Reckitt Benckiser Group PLC said on Wednesday that it has entered into a definitive agreement with Performance Health–a company owned by Madison Dearborn Partners–to acquire the Biofreeze brand for an undisclosed amount.  The consumer-goods company, which houses Dettol, Harpic and Durex among its brands, said the acquisition of the pain-relief brand represented an opportunity to unlock value through Reckitt’s infrastructure, expertise, and global operating footprint.  The London-listed company said the transaction was a perfect fit with the company’s health platform and deepened its presence within the broader pain category.

 

Pocket Outdoor buys Outside magazine, changes corporate name to Outside

Pocket Outdoor Media Inc., the Boulder magazine publisher that specializes in active lifestyle content and experiences, has purchased Outside Integrated Media LLC, the publisher of the iconic bible of the outdoor world, Outside magazine.  In addition to the magazine title, Pocket also is adding numerous other publications, travel businesses, television programming and more business channels in the outdoor sector. As a result, Pocket will change its name to Outside Inc.

Cosmetics & Pharmacy

Behind HydraFacial’s $1 Billion Valuation

The HydraFacial Co. has publicly released sales figures, ahead of the company’s planned debut on the public markets. HydraFacial makes a device that aestheticians can use to cleanse, exfoliate and hydrate clients’ skin. The procedure is best known for sucking gunk out of pores, which clients can then examine afterward, if they choose. In December, HydraFacial signed a $1.1 billion deal with Vesper Healthcare, a special purpose acquisition company cofounded by former Allergan chief executive officer Brent Saunders. That deal is set to close in the first half of this year, and would result in HydraFacial trading on the Nasdaq. Ahead of that, HydraFacial released updated sales figures — the company said it expects net sales of $119 million for 2020, higher than the previously estimated $115 million. Those figures are down from the prior year, said chief financial officer Liyuan Woo in an interview, and the company is operating at less than 70 percent capacity. The company has been operating at “reduced capacity” during the coronavirus pandemic, said HydraFacial CEO Clint Carnell, but has still seen “the Zoom effect” cause an increased focus on personal care.

We Are Paradoxx, a Prestige Plastic-free Beauty Company, Raises $4 Million

We Are Paradoxx, a prestige plastic-free beauty company, has raised $4 million in seed funding. The Belfast, Northern Ireland-based concern, which was launched in 2019, most recently closed a $1 million round, with new investors including Tom Singh, founder of the U.K. fashion retail chain New Look, and a board director of We Are Paradoxx, alongside existing investors, including individuals and venture capitalists. High-end hair care — which is expected to generate $31.5 billion in sales by 2027, with a 5.9 percent compound annual growth rate, according to Grand View Research — and sustainable beauty are getting a lot of attention from investors these days, as consumers continue to pivot toward such categories. We Are Paradoxx, which counts a 90 percent plastic-free hair-care line coming in reusable aluminum packaging, expects to use the new funds to expand further into the U.S., hair care and body care product development, and more R&D for electrical hair tools.

 

Discounters & Department Stores

Target to roll out dedicated Apple shops inside 17 locations

Target is pulling shoppers away from malls as it begins to open dedicated Apple shops in 17 of its locations starting this month, according to a Thursday press release. Target plans to expand the Apple shop-in-shops by the end of the fall. Apple products are already sold in Target stores, but the dedicated shops would double the tech giant’s footprint in select stores and expand its offerings. The collaboration also expands the product assortment online. Apple shop-in-shops at Target will centralize products, accessories and demonstrations in one place and the dedicated space will include new lighting fixtures and displays for Apple’s products. Target tech consultants will be receiving specialized training from Apple, per the release.

Belk bankruptcy plan approved by judge. Iconic retailer gets the lifeline it sought

Once one of Charlotte’s top companies, Belk filed Chapter 11 bankruptcy in Houston late Tuesday. It’s the first step in the retail icon’s reorganization plan that saw its owner, Sycamore Partners, cede a large stake of the company to its lenders while maintaining control. The bankruptcy plan was approved Wednesday morning. It gave Belk a new infusion of capital and cut its debt load by about $450 million. Combined, the moves provide the ailing department store chain financial breathing room as it grapples with the continuing effects of the COVID-19 pandemic.

Macy’s Media Network brings in $35M since launch

Macy’s in August launched a media network that looks to generate an additional source of income for the department store retailer by selling ads to brands, executives said on a call discussing fourth-quarter results with analysts. The Macy’s Media network has already brought in more than $35 million. Speaking to analysts, chief executive Jeff Gennette billed the service as “a new fashion and beauty publishing model.” An in-house advertising team runs the platform, which offers formats like sponsored product, website display and physical media ads, a spokesperson told Ad Age.

Activist Investors Nominate Nine Directors to Kohl’s Board

A group of activist investors has a big stake in Kohl’s Corp. and is attempting to take control of the department-store chain’s board, according to people familiar with the matter. A group that includes activists Macellum Advisors GP LLC, Ancora Holdings Inc. and Legion Partners Asset Management LLC, as well as 4010 Capital LLC, controls a combined 9.5% stake in Kohl’s and earlier this year nominated nine people to its now-12-person board, the people said. Neither the size of the stake nor the board bid previously has been revealed. The trio of activists, which previously teamed up on a campaign that remade the board of housewares retailer Bed Bath & Beyond Inc., thinks Kohl’s isn’t moving fast enough to address stagnant sales and declining operating margin, issues that predate the pandemic, the people said.

Macy’s mostly sticks to ‘Polaris’ turnaround after brutal pandemic year

Macy’s on Tuesday said that its fourth quarter results beat expectations thanks to what CEO Jeff Gennette told analysts was “solid holiday demand.” Net sales in the period fell 19% year over year to $6.8 billion, as comps fell 17%. Net income tumbled 53% to $160 million, but it was the first time in 2020 that Macy’s was in the black. Online sales rose 21% from 2019, reaching 44% of net sales, and are on the path to reach $10 billion in three years, according to a company press release. For the full year, Macy’s swung to a net loss of $3.9 billion, from $564 million in net income in 2019. Net sales last year reached $17.3 billion, from $24.6 billion the year before.

 

 

Emerging Consumer Companies

Madison Reed Doubles Sales, Raises $52 Million

Hair color business Madison Reed has raised $52 million after doubling its business during the coronavirus pandemic. Madison Reed said it saw sales surge 130 percent in 2020 as more people colored their hair at home, and industry sources said the company now has well in excess of $100 million in sales. “We have a completely different business than we had 18 months ago,” said Madison Reed founder and chief executive officer Amy Errett in an interview. “People woke up to realize that hair color is essential. It’s not just desire, it’s not just fashion.” At the peak of COVID-19 in 2020, Madison Reed was selling a box of hair color every five seconds, Errett said, noting that many people who switched to at-home coloring have been sticking with it. “They aren’t just going to switch back,” Errett said. With the new round of funding, Madison Reed plans to ramp up services related to hair coloring, open more Color Bars, make more hires and launch more products. The business recently launched digital video consultation services to assist at-home hair colorers, and a mobile app is in the works, Errett said.

Allbirds is investing in a plant-based leather substitute, plans faux-leather shoe drop in December

The sustainability focused shoe maker Allbirds has taken another step to green its supply chain with a small $2 million investment in a new company called Natural Fiber Welding. The investment in Natural Fiber Welding will see Allbirds bring a vegan leather replacement option to customers by December 2021. It’s a natural addition for a company that has always billed itself as focused on environmental impact in other aspects of its apparel manufacturing. Allbirds these days is far more than a shoe company and Natural Fiber Weldings suite of products that include both a purportedly tougher cotton fiber made using the company’s proprietary processing technology and a plant-based leather substitute. Those materials could find their way into Allbirds array of socks, shoes, tshirts, underwear, sweaters, jackets, and face masks.

 

Burrow raises $25 million

Burrow, the New York-based furniture company that launched with a modular sofa, has raised a $25 million Series C. The company has now raised a total of $55 million. The Series C was led by Parkway Venture Capital, with Managing Partner Gregg Hill joining Burrow’s board of directors. NEA, Red & Blue Ventures, Winklevoss Capital and Michael Seibel of Y Combinator also participated in the new round. Burrow participated in the Y Combinator accelerator in 2016 with an initial aim of building sofas that, by virtue of being modular, were easier to move and adapt to a variety of living spaces. Now its product lineup also includes armchairs, ottomans, tables, rugs, lights and other accessories. The company says it launched 19 new products last year, including a modular shelving system.

 

 

Grocery & Restaurants

Gelson’s Markets to be sold to Japanese retailer PPIH

Southern California grocer Gelson’s Markets is being acquired from owner TPG Capital by Tokyo-based Pan Pacific International Holdings (PPIH), the parent company of Japanese retailers Don Quijote Co. Ltd. and Marukai Corp. Encino, Calif.-based Gelson’s operates 27 upscale supermarkets from Santa Barbara to San Diego, mostly along the Southern California coast and in the Los Angeles area. San Francisco- and Fort Worth, Texas-based TPG acquired Gelson’s in February 2014 as part of its purchase of the grocer’s then-parent company Arden Group. Gelson’s describes itself as an operator of “specialty grocery stores.” Its locations offer the full amenities of a traditional supermarket but with “the local flavor of a neighborhood market,” emphasizing a high level of service — including in-house culinary experts in tune with Southern California’s lifestyle — and fresh foods. Overall, PPIH operates 638 international stores, including 582 in Japan.

 

Beyond Meat announces partnerships with McDonald’s and Yum Brands

Beyond Meat, Inc. announced Thursday two separate partnerships with McDonald’s and Yum Brands. Beyond Meat’s collaboration with Yum Brands is a “global strategic partnership” to co-create multiple products for each of the Yum brands over the next several years, expanding upon its initial test of Beyond fried chicken at select KFC locations and Beyond Italian sausage pizza released at Pizza Hut in 2020. Beyond Meat’s partnership with McDonald’s, however, is a three-year agreement as the “preferred supplier” of the patty in McDonald’s highly anticipated McPlant burger, announced in November. In its partnership with Beyond Meat, Yum Brands plans to increase the number of “plant-based items” marketed toward flexitarians and evolving customer tastes. Beyond Meat’s collaboration with McDonald’s, meanwhile, seemingly allows the quick-service chain to explore partnerships with other meat alternative companies (or to create their own products in-house). Together, Beyond Meat and McDonald’s will be working on expanding the McPlant platform creating plant-based options for chicken, pork and eggs.

Home & Road

Lowe’s Q4 tops Street as sales jump 27%; cites broad demand across all departments

Lowe’s Cos. reported fiscal fourth-quarter profit and sales that beat expectations as spending on home projects continues to surge amid the pandemic. The home improvement retailer reported net income of $978 million, or $1.32 a share, for the quarter ended Jan.31, compared to $509 million, or $0.66 a share, in the year-ago period. Adjusted earnings totaled $1.33 per share, above analysts’ estimates of $1.21. Sales jumped 26.7% to $20.31 billion, beating the FactSet consensus of $19.42 billion, Same-store sales, which includes e-commerce, rose 28.1%, also more than expected. Lowe’s reported its results the day after rival Home Depot posted its fourth quarter results, which included its third consecutive month of 25% comp sales.

Casper posts Q4 loss of $15M on increased revenue

Direct-to-consumer bedding retailer Casper said its revenues for the fourth quarter, ended Dec. 31, 2020, increased 18.4% to $150.3 million over the $127 million in revenue in the fourth quarter of last year, and the company attributed much of that increase in North America to its growing retail partnership program. The company posted a net loss of $15 million for the quarter, a 41.4% improvement over the $25.6 million net lost in the same quarter last year. For the year, Casper said net revenues climbed 13.1% to $497 million compared with $439.3 million in fiscal 2019. The company lost $89.6 million on the year, a 3.7% improvement over a net loss of $93 million last year. Retail partnership revenue increased 42.8% to $48.4 million for the quarter, and 55.4% to $133.6 million for the year. Direct-to-consumer revenue increased 19.1% to $101.9 million for the quarter and 7.5% to $485 million for the full year. The company said its adjusted EBITDA improved by $13.4 million, or 79.5%, to a loss of $3.5 million for the quarter, and improved $25.4 million, or 35.9%, to a loss of $45.3 million for the year.

Wayfair posts Q4 revenue of $3.7 billion

Wayfair posted fourth-quarter total net revenue of $3.7 billion, which is up 44.9% from the fourth quarter of 2019, along with a gross profit of $1.1 billion or 29% of total revenue for the quarter ending Dec.31, 2020. “In Q4, Wayfair delivered another solid quarter of growth, profitability and free cash flow. Online shopping behavior is becoming increasingly entrenched and consumer demand for the home category remains strong,” said Niraj Shah, Wayfair CEO, co-founder and co-chairman. “As we look beyond the pandemic period, we are confident that our long-term orientation and years of investments should translate to compounding share gains and increasing profitability in a rapidly growing e-commerce market.” Diluted earnings per share for the fourth quarter were 23 cents compared with negative $3.54 in the fourth quarter of 2019. The company said the number of active customers in its direct retail business reached 20.3 million by the end of the fourth quarter, which is an increase of 34% over the previous year. And, repeat customers placed 72.5% of total orders delivered in the fourth quarter of 2020, compared to 68.6% in the fourth quarter of 2019.

Aaron’s revenues dip for Q4, fiscal year

For the fourth quarter, ended Dec. 31, 2020, Aaron’s revenues declined 1.1%, down to $430.2 million compared with $435 million in the year-ago period. The decline was due to the net reduction of 75 company-operated stories during 2020, partially offset by strength in customer payment activity. On a same-store basis, revenues were up 34% year-over year. Aaron’s consolidated revenues dipped nearly 3% compared with fiscal year 2019, a decline the company attributed to a reduction of 253 company-operated stores in 2019 and 2020. The impact of the store reduction was partially offset by a 1.8% increase in same-store revenues for 2020.

Jewelry & Luxury

Signet Raises Minimum Wage to $15 an Hour

Signet Jewelers has raised the minimum wage for all its U.S. workers to $15 an hour. The new wage will be rolled out by spring of 2022 and will cover all the company’s full- and part-time workers, as well as its virtual jewelry consultants. The move follows Signet’s Love Takes Care Appreciation Award, a bonus it paid to full- and part-time hourly employees in recognition of their work during the pandemic. “We believe that raising our minimum wage is the right thing to do,” said Signet CEO Gina Drosos in a statement.

Hermes Sales Soar as Shoppers Stick to Top Luxury Brands

Hermes International sales jumped as the Birkin bag maker continued to benefit from its established appeal as a premium luxury brand. Sales rose 16% in the fourth quarter at constant exchange rates, almost twice as much as analysts expected. The leather goods unit was the main driver behind the performance. The shares rose as much as 8.9% to a record. Hermes, also known for its silk scarves, joins LVMH in reporting better-than-expected results as luxury shoppers turn their attention to established premium brands including Louis Vuitton and Dior during the pandemic.

LVMH’s Moet Hennessy buys in to rap star Jay-Z’s champagne brand

LVMH’s Moet Hennessy is buying a 50% stake in rap star Jay-Z’s Armand de Brignac champagne brand, the latest luxury brand to try to broaden its appeal with a celebrity tie-up. “I’m proud to welcome the Arnault family into ours through this partnership,” the “Empire State of Mind” singer said in a statement, referring to the family that runs LVMH. Financial terms of the deal, which was reported earlier by the Wall Street Journal, Financial Times, and New York Times, were not disclosed.

Karen Katz, Emma Grede Join The RealReal’s Board

The RealReal, the world’s largest online marketplace for authenticated, consigned luxury goods, has named Karen Katz, former chief executive officer of Neiman Marcus Group, and Emma Grede, cofounder and CEO of Good American and founding partner of Skims, to its board. The RealReal’s 10-person board is now 60 percent female. “Among the 3,000 largest U.S. publicly traded companies, one in 10 boards will have no women,” said Julie Wainwright, CEO of The RealReal. “Diversity in the boardroom brings a broader cross-section of experiences and perspectives, which is essential for innovation and evolution. We have been intentional in our efforts to expand diversity within our board, and we believe this further strengthens our ability to capitalize on the significant opportunity ahead of us.”

 

Office & Leisure

GameStop CFO resigns a month after the Reddit trading frenzy

After a wild several weeks for GameStop, the retailer’s chief financial officer is resigning. The company announced Tuesday that Jim Bell, its executive vice president and CFO, will resign from his roles on March 26. GameStop (GME) has started searching for a new CFO “with the capabilities and qualifications to help accelerate GameStop’s transformation,” it said, hinting at the company’s efforts to shift its focus from physical to online retail. The announcement comes about a month after a trading frenzy fueled by the Reddit page WallStreetBets caused a massive spike — and, later, drop — in GameStop’s stock. From the start of the year to January 27, when the stock closed at $347.51, shares gained nearly 1,915%. GameStop stock is now trading around $45, a big dip but still above where it started the year.

Report: Soho House Looks to Go Public in New York

To benefit from investor interest in travel and leisure equities as COVID-19 dissipates, Soho House is forming plans to list in New York by as soon as March, the Financial Times reported. The company was able to keep more than 90 percent of its paying members during the pandemic, even with sharp declines in revenues due to sites being closed. According to FT, an annual membership typically costs £1,750 (approximately $2,450). Soho House reportedly made £293 million (approximately $411 million) in revenues in 2019, about half of which originated from food and drink revenues and 20 percent from recurring payments by members. The rest originated from housewares. Soho House Founder Nick Jones opened the inaugural location in 1995. The company has since expanded quickly, and has become a popular attraction for celebrities.

The iconic Mr. Potato Head gets a 21st-century rebrand

This fall, you’re cordially invited to Mr. Potato Head’s wedding. He’s marrying his partner of many years, another Mr. Potato Head. And I promise it’s going to be the party of the year, with—you guessed it—plenty of spuds on the menu. The toy giant Hasbro is rebranding its iconic Mr. Potato Head toy by dropping the “Mr.” from the name. On the surface, it may seem like a subtle shift, but it is designed to break away from traditional gender norms, particularly when it comes to creating Potato Head families—how toddlers frequently play with the toy, according to Hasbro’s research. But starting this fall, when the new brand is unveiled, kids will have a blank slate to create same-sex families or single-parent families. It’s a prime example of the way heritage toy brands are evolving to stay relevant in the 21st century.

Fast-growing Freshpet racing to refill bare pet food fridges as sales continue to boom

Specialty pet food maker Freshpet is growing … fast. How fast? CEO Billy Cyr on Monday compared Freshpet to “an 11-year-old boy who wears size 15 sneakers.” Stumbling in those big ol’ shoes is something that happened to Freshpet at the end of 2020 as the manufacturer struggled to keep up with high demand and left many customers staring at empty, or nearly empty, fridges. While Freshpet products can still be difficult to find — all these snowstorms aren’t helping — Cyr said the company’s production output is accelerating this year and is on its way to climbing out of the inventory hole it dug. It will take until mid- to late April to fully refill the deficit, though consumers will see improvements well before then, Cyr said. Even with absorbing the bumps of 2020, Freshpet on Monday reported net sales for the year of almost $319 million, up nearly 30% from 2019. The company expects to surpass net sales of $430 million in 2021, which would be a 35% jump.

Technology & Internet

Best Buy is speeding changes to adapt to a post-pandemic consumer

Best Buy CEO Corie Barry said the pandemic has forever changed the way consumers shop — and the retailer is not waiting to adapt. On Thursday, she laid out how Best Buy will transform its workforce, store fleet and sales strategy to focus more on e-commerce. The company is laying off thousands of employees and reskilling others for digital roles. It is testing new stores with a smaller sales floor and more space for fulfilling online orders. And it is considering shrinking the footprint of its nearly 1,000 stores across the country. Online sales in the U.S. grew 89% to $6.7 billion in the fourth quarter ended Jan. 30 and made up 43% of its total U.S. sales for the three-month period. Barry said she expects a larger percentage of Best Buy’s overall sales will take place on its website and app rather than in its stores. It anticipates digital sales will represent about 40% of total U.S. sales this fiscal year. That compares with 19% two years earlier and 5% a decade ago. Even with this rapid growth, Barry said, the company’s brick-and-mortar footprint will still play a key role. Stores will have products on display and staff to help customers, but they will also increasingly serve as warehouses where employees pick and pack e-commerce orders and convenient spots where shoppers can quickly retrieve an online purchase in the parking lot.

 

Fry’s Electronics suddenly went out of business

Fry’s Electronics suddenly closed all of its stores overnight, ending a nearly four-decade run in business. The company, which had 31 stores across nine US states, said in a statement on its website that it “made the difficult decision to shut down its operations and close its business permanently” because of changing consumer shopping habits and the ongoing Covid-19 pandemic. Based in San Jose, California, the privately held company was a family business. It was founded in 1985 by the three Fry brothers with the goal of being a “Silicon Valley retail electronics store to provide a one-stop-shopping environment for the Hi-Tech Professional.” The retailer didn’t innovate its online operations as rapidly compared to its larger rivals.

 

Shippo raises $45M more at $495M valuation as e-commerce booms

Shippo, a software company that provides shipping-related services to e-commerce companies, announced a new $45 million investment. The new capital values the startup at $495 million. According to Shippo CEO and founder Laura Behrens Wu, her company made material progress on customer acquisition and partnerships last year. That led to a decision around the time of Shippo’s Q4 board meeting with her investors that it was a good time to put more capital into the company. According to Behrens Wu, her company made material progress on customer acquisition and partnerships last year. That led to a decision around the time of Shippo’s Q4 board meeting with her investors that it was a good time to put more capital into the company.

 

Finance & Economy

Personal income leaps 10% in January thanks to stimulus, but inflation still in check

A fresh round of government stimulus checks sent personal income up to its biggest monthly gain since April 2020 though inflation remained tame, the Commerce Department reported.  Personal income jumped 10% after a 0.6% increase in December. That was even higher than the 9.5% Dow Jones estimate.  The gain came from the issuance of $600 stimulus payments that Congress approved for millions of Americans. Consumers took those checks and spent them quickly, sending retail sales surging and pushing overall expenditures up 2.4% for the month, a touch below the estimate of 2.5%.  The slightly softer-than-expected spending data came amid a bust in the personal savings rate to 20.5%, or $3.93 trillion.  All that spending failed to gin up inflation pressures, however.

Unemployment claims drop as labor market continues to recover from pandemic

The number of Americans filing for first-time unemployment benefits unexpectedly dropped last week as the labor market continues its slow recovery from the coronavirus pandemic.  Figures released by the Labor Department show that 730,000 Americans filed first-time jobless claims in the week ended Feb. 20, lower than the 838,000 forecast by Refinitiv economists.  The number of Americans applying for aid has remained stubbornly high for months, hovering around four times the pre-crisis level, although it’s well below the peak of almost 7 million that was reached when stay-at-home orders were first issued in March. More than 70 million Americans, or about 40% of the labor force, have filed for unemployment benefits during the pandemic.

Retailers Hopeful For ‘Revenge Shopping’

Some U.S. retailers are counting on consumers to come back to their stores with a vengeance.  The CEO of TJ Maxx told analysts he predicts so-called “revenge shopping” will erupt once most Americans can get the COVID-19 vaccine.  Revenge shopping is a theory that says people who have been cooped up for an extended period of time will fork out lots of money on purchases.  U.S. retailers say they expect to have a strong year thanks in part to revenge shopping. The National Retail Federation is forecasting sales will grow to more than $4.3 trillion in 2021.  That would be largest growth reported since 2004.