Apparel & Footwear

Foot Locker shares plunge more than 20% as retailer posts holiday loss, delays key financial target

Shares of Foot Locker fell more than 20% on Wednesday after the sneaker retailer reported a holiday-quarter loss, issued weak guidance for the current year and said it’s behind on meeting its financial goals. Given how poorly its past fiscal year went, the company is now expecting the profitability goal it laid out during its March 2023 investor day to be delayed by two years, Foot Locker’s finance chief Mike Baughn said. It now anticipates to reach an EBIT margin of 8.5% to 9% by 2028, said Baughn. The company swung to a loss in the three-month period that ended Feb. 3. Foot Locker lost $389 million, or $4.13 per share, compared with income of $19 million, or 20 cents per share, a year earlier. Sales rose slightly to $2.38 billion, up about 2% from $2.34 billion a year earlier. In the current fiscal year, Foot Locker is expecting profit to be worse than analysts had expected. It anticipates adjusted earnings per share will be between $1.50 and $1.70, compared with estimates of $1.40 to $2.30, according to LSEG. CEO Mary Dillon said in a statement that Foot Locker managed to drive full-price sales “in addition to compelling promotions” during its holiday quarter. But the retailer’s gross margin fell by 3.5 percentage points “primarily as a result of higher markdowns.”

 

Gap shares pop as company’s holiday earnings blow past estimates, Old Navy returns to growth

Gap’s largest banner Old Navy returned to growth for the first time in more than a year during its holiday quarter as the retailer delivered earnings on Thursday that came in well ahead of Wall Street’s expectations.  Sales at Old Navy grew 6% to $2.29 billion, and Gap’s overall gross margin surged 5.3 percentage points to 38.9% thanks to fewer markdowns and lower input costs. The company’s reported net income for the three-month period that ended February 3 was $185 million, or 49 cents per share, compared with a loss of $273 million, or 75 cents per share, a year earlier. Sales rose slightly to $4.3 billion, up about 1% from $4.24 billion a year earlier. Like other retailers, Gap benefited from a 53rd week during fiscal 2023 and without it, sales would’ve been down during the quarter. The extra week contributed about four percentage points of growth during the fiscal fourth quarter, the company said. Comparable sales during the quarter were flat, compared to estimates of down 1.1%. In-store sales were up 4% while online sales decreased 2% and represented 40% of total revenue. The retailer decreased inventory by 16% during fiscal year 2023, and with those levels now in check, Gap is working to hold the line on promotions and drive full price selling.

 

After Months of Anticipation, Deckers CEO Dave Powers Reveals New ‘Super Sneaker Brand’

Since last fall, Deckers Brands has teased a new “super sneaker brand.” Now, the scope of the project is in full view. Called Ahnu, many market watchers following the Goleta, Calif.-based footwear company for a while might recognize the name. In fact, in 2009, Deckers acquired the Ahnu label for an undisclosed sum and ran the then outdoor focused shoe brand until 2018 when the company shuttered its operations. But Tuesday’s announcement is not considered a relaunch of the Anhu of the past. “We originally had no intention of using the Ahnu name for this project, but we were having challenges coming up with a name that we could use on a global level when it came to securing trademark rights and all of those things,” Deckers Brands president and CEO Dave Powers told FN in an exclusive interview ahead of the launch. “So we landed on Ahnu because we already had the IP (intellectual property) and we have all the sites globally, so it just made sense.” And while the new launch shares the same name as its predecessor, the two are nothing alike. The final result is what Powers calls a “true sneaker brand” that incorporates “timeless and modern style with innovative materials” meant for all-day wear and comfort. The new Sequence 1 sneaker will be available next week in low, mid, and high variations, each priced at $225, $240, and $255, respectively.

 

Abercrombie & Fitch beats holiday estimates as sales soar again, helped by higher prices

Abercrombie & Fitch said Wednesday that its holiday-quarter sales jumped 21% and its profit grew thanks to higher prices and lower raw material costs. The apparel retailer expects its growth story will continue as it issued better-than-expected sales guidance. The company’s reported net income for the three-month period that ended Feb. 3 was $158.4 million, or $2.97 per share, compared with $38.33 million, or 75 cents per share, a year earlier. Sales rose to $1.45 billion, up about 21% from $1.2 billion a year earlier. For the current quarter, Abercrombie expects sales to rise by a low double-digit percentage, compared with estimates of up 7.2%, according to LSEG. For the full year, it anticipates sales will grow between 4% and 6%, compared with estimates of 4%, according to LSEG. Chief Financial Officer and Chief Operating Officer Scott Lipesky said on a call with analysts that he expects growth to be tempered in the second half of the year compared to the first. During the quarter, comparable sales grew 16% and gross margin came in at 62.9%, 7.2 percentage points higher than the year ago period. Higher average selling prices plus lower freight and raw material costs boosted profit.

 

 

Athletic & Sporting Goods

BowFlex Inc. Files for Chap 11 Bankruptcy; Appoints Stalking Horse Bidder

BowFlex, Inc., formerly Nautilus, Inc., entered into a purchase agreement with Johnson Health Tech Retail, Inc. to serve as the Stalking Horse Bidder to acquire substantially all of the company’s assets for $37.5 million in cash at the closing of the transaction, less closing adjustment amounts for accounts receivable, inventory and certain transfer taxes.  The agreement comes two weeks after Bowflex said in its last quarterly financial report that the company believed that conditions would not improve in the next several quarters, negatively affecting its liquidity projections. Management determined there was substantial doubt about the company’s ability to continue as a going concern for 12 months.  The DIP Facility is being provided by SLR pursuant to an amendment to the company’s existing Term Loan Credit Agreement with SLR dated November 30, 2022.

Vista Outdoor rejects $2.9 billion purchase offer

Vista Outdoor Inc.’s board has rejected an unsolicited acquisition offer made last month by MNC Capital. The offer was to buy the company for $35 per share, a 17% premium over Vista Outdoor’s current stock price, worth about $2.9 billion.  The company’s board continues to recommend accepting an offer from Czechoslovak Group (CSG) to buy its Sporting Products business, an acquisition that the company said will be completed this year, subject to approval by Vista Outdoor’s stockholders and regulatory approvals.  The MNC offer would have acquired both the Sporting Products business (which contains Vista Outdoor’s ammunition business), and its Revelyst business unit, which contains its bike and outdoor brands.

Cosmetics & Pharmacy

CVC-owned beauty retailer Douglas plans Frankfurt listing
Private equity-owned German beauty retailer Douglas has announced plans to list in Frankfurt, raising hopes for a rebound in Europe’s moribund market for initial public offerings. The retailer, which operates more than 1,800 stores in over 20 European countries and is majority-owned by private equity group CVC, said on Monday that it was aiming to raise €1.1bn. People familiar with the group’s plans said Douglas was seeking a valuation of about €6bn, which would be Frankfurt’s largest IPO since Porsche’s blockbuster listing in 2022. Douglas intends to sell €800mn of new shares to outside investors while CVC and other existing shareholders also plan to inject €300mn into the company as part of the IPO.

Elevation Labs Acquires Smaller Copacker Boomerang Laboratories

Elevation Labs has acquired beauty manufacturer Boomerang Laboratories to diversify its geographic and merchandise reach. Terms of the deal weren’t disclosed. Started in 1999, Boomerang was previously purchased by private-label and contract manufacturer Guy & O’Neill in 2020. Private equity firm Centre Partners invested in Guy & O’Neill in 2018. Elevation Labs, which was founded in 1995 and bought by private equity firm Knox Lane in 2022, is housed in a 260,000-square-foot facility in Idaho Falls, Idaho. The company acquired manufacturer Colorado Quality Products in 2018 to extend its footprint to Denver, where it now has a 160,000-square-foot facility. Boomerang has a 75,000-square-foot facility in Spring Park, Minn., a city about 20 miles west of Minneapolis. Elevation Labs specializes in skincare, haircare, color cosmetics, body care and over-the-counter products, particularly in the clean beauty realm. Boomerang specializes in skincare, haircare, personal care and light-duty household cleaning products. According to Elevation Labs chief innovation officer Amy Hart, Boomerang serves about 25 brands, roughly 100 fewer than Elevation Labs.

Clinical Skin Acquires Glytone From Pierre Fabre Laboratoires

Clinical Skin has acquired Glytone, the dermatological skin care brand, from Pierre Fabre Laboratories. Financial terms of the deal were not disclosed. “This strategic acquisition reiterates a continued commitment to enhancing [Clinical Skin’s] unrivaled product portfolio and expanding its presence in the skin care industry,” the company said in a statement Monday. Glytone, which has tapped into Pierre Fabre’s labs for more than 20 years, answers concerns such as skin aging, hyperpigmentation and acne. “With a focus on combining science and skin care expertise, Glytone garnered a loyal customer base and earned the trust of dermatologists in the United States,” Clinical Skin said. Dermatological skin care brands became a hot commodity during the coronavirus pandemic and subsequently still clock robust growth. Terms of the deal were not disclosed.

Leste Group Acquires Significant Stake in Prestige Cosmetics

Global alternative investment manager, Leste Group has acquired a significant stake in Prestige Cosmetics, a leading distributor of luxury perfumes and cosmetics in Brazil. Leste made this acquisition through its private equity firm; financial terms were not disclosed. Prestige Cosmetics is the exclusive distributor in Brazil, with a growing presence in North America. The company offers fragrance and skincare brands including Clinique, Tom Ford, Salvatore Ferragamo, Dolce & Gabbana, Bulgari, Bond No. 9 and others. Leste will assist the company in accelerating its international expansion, building on Prestige’s operations currently outside of Brazil.

Discounters & Department Stores

Investors throw another $800M onto Macy’s takeover bid

Arkhouse Management, in partnership with Brigade Capital Management, on Sunday boosted their bid to acquire Macy’s by 14.3%, or about $800 million, to $24 per share and disclosed more financial detail. In January Macy’s rebuffed the firms’ $5.8 billion takeover offer. Arkhouse revealed that Fortress Investment Group and One Investment Management US are equity capital partners in the proposed deal. Macy’s previously said it wouldn’t engage further with the suitors, citing insufficient details about their financing. Also on Sunday, Macy’s acknowledged the latest offer to buy all shares, which amounts to $6.6 billion, saying it “will carefully review and evaluate the latest proposal consistent with the Board’s fiduciary duties and in consultation with its financial and legal advisors” and declining to comment further.

 

Target to launch paid membership program to rival Amazon Prime, Walmart+

Target on April 7 plans to debut Target Circle 360, a paid membership program that builds on its Target Circle loyalty program, the company announced Tuesday. The new program will offer unlimited free same-day delivery for orders $35 and up, along with free two-day shipping, rivaling similar offerings from Walmart and Amazon. Target will offer three membership options – Target Circle, which will remain free; Target Circle Card (formerly Target RedCard) and Target Circle 360. As part of a launch promotion, the paid Target Circle 360 memberships will cost $49 for the first year for noncardholders who sign up by May 18. After that, the annual cost for noncardholders is $99. For Target Circle cardholders, the annual cost will be $49. At the same time, Target reported earnings, with Q4 revenue up 1.7% year over year to nearly $32 billion. Comparable sales fell 4.4% in the fourth quarter. For the year, revenue fell 1.6% to $107.4 billion from $109.1 billion a year earlier. Comps for the year fell 3.7%, while full-year operating income grew 48% to $5.7 billion from $3.8 billion a year earlier.

 

Big Lots’ cost-cutting efforts helped it ‘maintain liquidity through a challenging period’

Big Lots’ net sales for Q4 fell 7% to $1.43 billion from $1.54 billion a year ago, the company said in a Thursday earnings announcement. Comparable sales fell 8.6%. The retailer’s net loss rose to $30.7 million for the quarter ended Feb. 3. The company also ended Q4 with $406 million in long-term debt, up from $301 million a year ago. For the full year, Big Lots’ net sales fell nearly 14% to $4.72 billion from $5.47 billion a year ago. Gross margin also declined nearly 12% to $1.69 billion from $1.91 billion year over year. As part of its ongoing turnaround plan, Big Lots said it cut selling, general and administrative expenses by over $140 million for the year, reduced capital expenditures by almost 60% year over year and reduced inventory by nearly $200 million. Those achievements helped it “maintain liquidity through a challenging period,” enabling the company to end Q4 with $254 million in net liquidity, CEO Bruce Thorn said in a statement.

Citing momentum over the holidays, Nordstrom moves deeper into off-price

With the benefit of an extra week, Nordstrom Q4 net sales rose 2.2% to $4.3 billion; with credit card revenue up 6.7% to $127 million, total revenue in the period rose 2.3% to $4.4 billion. By banner, full-line Nordstrom fell 3%, in part due to the closure of its Canadian stores. Off-price Rack rose 14.6%. Digital sales were 38% of total sales and fell 1.7%. Gross profit expanded by 125 basis points to 34.4%. Net earnings rose 12.6% to $134 million, per a company press release.

 

 

Emerging Consumer Companies

MALK Organics secures funding for expansion and new product launches
MALK Organics, a leading alternative milk brand, has closed an internal investment round led by existing investors Benvolio Group and Rotor Capital. They have announced significant distribution expansion and the launch of three new products, including Cashew MALK and Shelf Stable Unsweetened Almond MALK. The company’s growth has made it the fastest-growing plant-based milk brand in the past year. The funding will be used to expand retail presence, increase marketing efforts, and support new product innovation. The new products will be exclusively available at Whole Foods and showcased at the Expo West show. MALK’s CEO, Jason Bronstad, expressed excitement about the funding round and the brand’s commitment to providing cleaner plant-based alternatives. Founded in 2015, MALK Organics offers certified organic products with 3–5 simple ingredients. Benvolio Group and Rotor Capital are key investors in the brand, supporting its growth in the plant-based food industry.

PawCo Foods secures $2 million funding for plant-based pet food
PawCo Foods, a plant-based pet nutrition brand, secured a $2 million seed funding round led by Elevate Ventures and other investors. The funding will be used to open a second production facility in the Midwest, invest in growth, research, new recipes, and marketing. The brand, founded by Dr. Mahsa Vazin, focuses on providing healthy and sustainable options for dogs through products like InstaBites™, LuxBites™, and GreenBites. PawCo aims to revolutionize the pet food industry by offering plant-based alternatives that are nutritious and eco-friendly. The company’s mission is to improve pet health, decrease animal farming, and reduce the environmental impact of pet food manufacturing. Dr. Vazin’s background as a former scientist at Impossible Foods and the use of AI technology for nutrition optimization set PawCo apart in the market.

Razor Group acquires Perch, solidifying global e-commerce aggregator leadership
Razor Group has acquired Perch, a leading Amazon aggregator in the US, solidifying its position as the global leader in online marketplace consumer brand aggregation. This acquisition is part of Razor’s strategy to reach over $1 billion in revenue in the medium-term and manage more than 40,000 products across various online channels in multiple countries. The acquisition was supported by a Series D financing round led by Presight Capital, demonstrating confidence in Razor’s growth potential. The funding will be used to invest in technology infrastructure, including AI and large language models, to automate consumer-to-manufacturer retail operations. Razor’s focus is on building a Western response to Chinese vertical C2M models, emphasizing technology automation for supply chain integration and product innovation. Perch’s CEO, Chris Bell, highlighted the transformation of their business through technology and supply chain capabilities, creating a platform for global consolidation and growth. Razor Group and Perch combined create a strong global platform for the next stage of industry consolidation and expansion.

 

 

Food & Beverage

Momentous Announces Strategic Partnership With Humble Growth

Momentous, a leading human performance company that focuses on supplementation and nutrition, announced the acquisition of a significant minority stake by Humble Growth, an investment firm dedicated to propelling growth and value creation for disruptive companies that are changing the ways consumers eat, drink, feel, and live. Co-founders Jeff Byers and Erica Good will continue to lead Momentous together as CEO and President, respectively. Established in 2018, Momentous is a mission-driven supplement and sports nutrition-focused brand. Inspired by co-founder Jeff Byers’ experience with elite performance resources during his playing career in the NFL, Momentous seeks to fill a market gap by offering an expert-led and science-backed platform for supplementation and lifestyle optimization. Momentous was recently named to the 2023 Inc. 5000 list of America’s fastest-growing private companies, having grown revenue by over 300% over the last year.

Dole plc Announces Sale of Progressive Produce to Arable Capital

Dole plc has announced that it has reached an agreement to sell its 65% equity stake in Progressive Produce LLC (“Progressive Produce” or the “Company”) to PTF Holdings, LLC, the parent company of Pacific Trellis Fruit, LLC. Dole will receive gross cash proceeds of $120.25 million from this sale. Progressive Produce, located in Los Angeles, California, is a grower, packer, and distributor of conventional and organic produce to the retail, wholesale and foodservice sectors in the U.S. and Canada. Founded in 1967, today the Company is one of California’s premier produce companies with annual sales in excess of $400 million.

Vegan Food Group announces Tofutown acquisition

Vegan Food Group has entered into an agreement to acquire Tofutown, a German tofu manufacturer with €60 million in revenue. The latest acquisition is Vegan Food Group’s first since it rebranded as a new development out of its initial company, VFC Foods, founded in 2020 by Veganuary co-founder Matthew Glover and chef Adam Lyons. Vegan Food Group’s portfolio, which also includes the VFC Foods, Meatless Farm and Clive’s Purely Plants brands, already has 80 SKUs in the UK and EU across 21,000 distribution points. In a statement shared on LinkedIn, Vegan Food Group’s chief mission officer Glover said that the combined entity will be positioned for profitability in 2024 with a “clear line of sight” for scaling group revenues beyond €100 million following the Tofutown deal. Tofutown was established over 40 years ago and is a supplier of 100% natural organic tofu, spreads and meat alternatives in the EU, predominantly in Germany where the company is based.

 

 

Grocery & Restaurants

Kroger stock jumps following Q4 earnings report

Kroger stock spiked on Thursday morning with shares hitting a high of $54.75 by around 11 a.m., up 8.44%, upon release of its Q4 earnings report that handily beat analyst predictions on its earnings per share. The company reported earnings of $1.34 on revenue of $37.06 billion for the quarter ended January, coming in far above analyst estimates of $1.13 per share. Revenue was up 6.44% year over year, and Kroger said it anticipates net earnings per diluted share of $4.30 to $4.50 per share in fiscal year 2025. Adjusted earnings for the year came in at $4.76 per share, delivering an adjusted earnings per share growth of 8%. Identical sales, when not including fuel sales, were down 0.8% for the quarter, but up 0.1% when including fuel sales. For the full year, identical sales were up 0.9%, and up 2.3% when including fuel, the company reported.

McDonald’s, Portillo’s, Dutch Bros. open restaurants in the Sun Belt

When Chicago-based Portillo’s enters a new market, it sends its “Beef Bus” ahead of time, slinging its hot dogs and Italian beef sandwiches to new customers for weeks, introducing them to the brand and whetting their appetites before a new restaurant finally opens. Recently, the Beef Bus has been making a lot of trips to the Sun Belt. “Texas, by itself, has grown more people in the last decade than eight midwestern states that we have a presence in combined,” Portillo’s CEO Michael Osanloo told CNBC. “So it’s kind of a no brainer to go where the growth is.” The chain’s sales are “way stronger” in Texas, Arizona and Florida than in midwestern states such as Indiana and Wisconsin, according to Osanloo. Portillo’s opened its first location in Texas a little more than a year ago. In its first 12 months, the location generated $13 million in sales, the restaurant equivalent to a $1 billion box-office hit. While the exact states included in the Sun Belt can vary, the name refers to the southern third of the U.S. known for its sunny weather. In recent years, the region has seen booming population growth, setting it apart from the Northeast and Midwest. The trend accelerated during the Covid-19 pandemic as consumers sought more space, warmer weather, fewer government restrictions and cheaper housing in cities such as Charlotte and Phoenix, which count among the most populous in the U.S. along with Texas cities such as Houston and Dallas.

Home & Road

Beyond Acquires Zulily IP As It Prepares Overstock.com Relaunch

After relaunching Bed Bath & Beyond online and setting the table for the return of Overstock.com as an off-price/closeout operation, Beyond is adding to its e-retail portfolio again by bringing the Zulily brand on board. As it did with Bed Bath & Beyond, the company has acquired the intellectual property and other brand assets of Zulily, a flash sale pioneer in the e-commerce sector. Beyond characterized the Zulily acquisition as a strategic move designed to further strengthen the company’s position in the off-price market while complementing its portfolio of brands. Bed Bath & Beyond business is already in full swing and Overstock is scheduled to relaunch later this month, Beyond noted. The deal covers certain intellectual property assets related to the Zulily brand. Those include the Zulily website and domain names, trademarks, tradenames, customer database, social media accounts and software to run the website, Beyond pointed out, as well as the goodwill associated with the brand. The transaction excludes all of Zulily’s liabilities, liens and debts. Beyond purchased the assets for $4.5 million plus acquisition-related costs, funded with cash on hand, the company indicated.

Furniture orders rise again in November, but at a much cooler pace

Residential furniture orders in December rose 6% by the dollar over last year, according to accounting firm Smith Leonard, which surveys furniture manufacturers and retailers every month in its Furniture Insights report. Despite a rise though, orders rose less than they did in November (which was 26% higher) as well as the previous six months, all of which saw double-digit increases. Orders in November were higher for two-thirds of survey participants. Shipments for the month were down 4% from last November. For the year up through November, shipments are down 17% from 2022. “So despite recent improvements in new orders, trends continue to be affected by many companies shipping from their historically high backlogs through much of 2022,” said Mark Lafierriere, assurance partner at Smith Leonard. “Accordingly, December 2023 backlogs were down 5% from November 2023 and down 33% compared with December 2022.”

Ashley Home agrees to acquire Resident Home

Ashley Home Inc. and Resident Home Inc. today announced the signing of an agreement, under which Ashley Home., an affiliate of Ashley Global Retail, will acquire Resident Home Inc. (“Resident”). The transaction, which was unanimously approved by the board of directors of both companies, provides Resident, a leading digital retailer and wholesaler of mattresses and bedding accessories, with an opportunity to expand its home furnishings assortment and global footprint. Through Ashley’s affiliate company, Ashley Furniture Inds., Resident will experience improved sourcing and efficiencies to foster additional growth in both its direct-to-consumer and wholesale businesses. Through its award-winning Nectar, DreamCloud, Awara and Siena brands, Resident has established itself as a leading online seller of mattresses and bedding accessories.

Sleep Country Canada sees Q4 income slides, while sales jump 5.2%

Canadian sleep retailer Sleep Country Canada reported net income of C$44.5 million for its fourth quarter, a 44.5% slide from the prior year period. The 304-unit retailer’s sales for the quarter climbed 5.2% to C$255.6 million compared to sales of C$243 million in the fourth quarter last year. Same-store sales decreased 3.2% in the quarter in comparison with the fourth quarter last year. The retailer saw ecommerce sales climb to 24.6% of total sales in the quarter compared to 21.1% in the same quarter last year. For the year, the company reported sales of C$935 million, a 0.7% increase from prior-year sales of C$928.7 million. Net income for the full year dipped 35.6% to C$71.2 million for 2021 from C$110.5 million last year. Stewart Schaefer, president and CEO, called the quarter and year-end results “a solid finish” to a challenging year.

Arhaus posts second consecutive $1 billion year in 2023

Top 100 retailer Arhaus surpassed $1 billion in revenues for a second consecutive year, setting a new record in the process. For the full year, net revenues for the Boston Heights, Ohio-based retailer increased 4.8% to $1.288 billion, compared with $1.229 billion in 2022. In its earnings report announcing the figures, Arhaus noted that the increase was driven primarily by higher demand in both showroom and e-commerce channels as well as the delivery of orders in the backlog. For the year, its adjusted net income totaled $125.83 million, an 8.3% decrease compared with $142.10 million in 2022. For the year, Arhaus reported adjusted EBITDA of $203.48 million, giving it a full year EBITDA margin of 15.8%.

Looking ahead, Arhaus projects net revenues of $1.33 billion to $1.37 billion in FY2024 with net income of $95 million to $105 million.

Jewelry & Luxury

Fraser Group Shutters Matchesfashion

In the midst of some restructuring, Frasers Group has decided to shutter luxury e-commerce retailer MATCHESFASHION. The Business of Fashion reported that the group acquired the struggling e-tailer for $66.6 million USD just two months ago. In a statement from Frasers Group they said, “Whilst Matches’ management team has tried to find a way to stabilize the business, it has become clear that too much change would be required to restructure it, and the continued funding requirements would be far in excess of amounts that the Group considers to be viable. In light of this, Frasers has been informed that the directors of Matches have taken the decision to put the Matches group into administration. Frasers remains committed to the luxury market and its brand partners.” The Matches brick and mortar store was founded in London by Tom and Ruth Chapman in the late 1980s and has been in a staple amongst British fashion retailers for many years. The company once had a great selection of up and coming brands, and was the go-to retailer for emerging labels both homegrown and international. Since opening its e-commerce site in 2007, it has faced a bevy of rivals including Net-A-Porter and Farfetch.

“Big Four” Private Watch Brands Had Big 2023

The “big four” private watch brands—Rolex, Patek Philippe, Audemars Piguet, and Richard Mille—all gained market share in 2023, while several conglomerate-owned brands lost ground, according to Morgan Stanley’s seventh annual “Swiss Watcher” report, compiled in conjunction with LuxeConsult. Together, the four nonpublic brands claimed 43% of the market, up from 41.9% in 2022, and 36.9% in 2019. For those four watch lines, “desirability is near an all-time high,” wrote the study’s authors, “as evidenced by a further lengthening in waiting lists, although we note that premiums in the secondhand market have come down in recent months.” The continued popularity of independently owned watch brands is unique “within the broader luxury goods sector,” the report added. “In most other verticals, listed groups are gaining share.”

Champagne era for luxury industry prices starts to go flat

At the start of this year, Rolex did something that the luxury Swiss watchmaker hadn’t done in years: it didn’t raise its prices. Like many luxury companies, it has tended to pass along several price increases to its customers every year since 2020, usually in January and September. With coveted watches ranging in price from $5,000 to more than $100,000, Rolex has had the market clout, product quality and branding to do so. But that wasn’t always the case: up until 2018, the company only increased prices every two to three years, according to Morgan Stanley. The fact that even Rolex is now backing off on price rises marks a big shift in the luxury industry. Along with an expansion in offerings to aspirational middle-class consumers, years of aggressive increases had spurred a multiyear global boom for the luxury industry with double-digit annual sales growth and record profits. Analysts and investors now expect those price increases to moderate for most luxury companies.

 

Office & Leisure

Joann reportedly considers filing for bankruptcy

Joann may be looking to restructure. The fabric and craft supplies retailer is reportedly considering a bankruptcy filing, with it coming as soon as this week, reported Bloomberg News. The deal would give control to its lenders while reducing the company’s debt and shoring up its finances, according to the report. (Joann’s long-term net debt was $1,148.2 million as of Oct. 28, 2023.). According to the report, Joann is hoping to get enough support from lenders to exit Chapter 11 quickly via a process called a prepack filing. Joann, which operates approximately 830 stores across 49 states, has been without a permanent chief since May when Wade Miquelon retired as president and CEO. Chris DiTullio, executive VP and chief customer officer, and Scott Sekella, executive VP and CFO, are leading the “interim office of the chief executive officer” while the company searches for a permanent chief. For its third quarter, ended Oct. 28, Joann’s net sales fell 4.1% to $539.8 million with total comparable sales decreasing 4.1%. The company reported a net loss of $21.6 million compared to a net loss of $17.5 million in the same quarter last year.

 

L Catterton Makes Significant Investment in AmaWaterways

L Catterton, a leading global investment firm, announced that it has entered into a definitive agreement to acquire a significant stake in AmaWaterways (the “Company”), a global, award-winning luxury river cruise line, from a consortium of investors led by Certares. L Catterton joins founders Rudi Schreiner, Kristin Karst, and the Murphy family, all of whom remain committed to supporting the Company’s long-term growth and innovation in the river cruising industry and will continue to have meaningful ownership in the Company. Founded in 2002, AmaWaterways is a leading river cruise line with a rich history of curating unforgettable travel experiences for guests alongside their travel advisor partnerships around the world. With itineraries exploring the world’s most iconic rivers in Europe, Asia, and Africa, AmaWaterways customers can enjoy tailored experiences across its fleet of innovatively designed vessels.

 

Just Play Acquires Tara Toy

Just Play, a global toy company, has announced the acquisition of Tara Toy, manufacturer of licensed arts and crafts products. Tara Toy has grown its business over the past 50 years with a robust portfolio of licensed arts and crafts, activities, toys and more. They hold licenses including Disney, Marvel, “Star Wars,” Nickelodeon, L.O.L. Surprise!, Barbie and Hot Wheels. With this acquisition, Just Play will take a strategic step further into these same categories at retailers worldwide beginning in the fall. “One of the main benefits of the acquisition is that it allows Just Play to expand into new product categories,” says Charlie Emby, co-chief executive officer, Just Play. “This addition to Just Play’s portfolio will provide supplemental global growth opportunities, including through our new subsidiaries across Europe, Latin America and Asia.”

Technology & Internet

House members introduce legislation demanding ByteDance divest TikTok

Lawmakers introduced a bill in Congress on Tuesday that would require China’s ByteDance to divest TikTok in order to avoid a ban of the video app in the U.S. Representatives Mike Gallagher, R-Wis., and Raja Krishnamoorthi, D-Ill., introduced the legislation, dubbed the Protecting Americans From Foreign Adversary Controlled Applications Act. The bill says TikTok is controlled by a foreign adversary and poses a threat to U.S. national security. “This is my message to TikTok: break up with the Chinese Communist Party or lose access to your American users,” said Gallagher, chairman of the House Select Committee on the Chinese Communist Party, in a press release announcing the bill. Krishnamoorthi is the committee’s ranking member. Should the bill pass, ByteDance would have about five months to divest TikTok, while web-hosting companies and app stores such as those owned by Apple and Google would be forced to stop supporting the app and others tied to ByteDance.

 

Stitch Fix hints at new client experience as declines persist

Stitch Fix on Monday said Q2 net revenue fell 17.5% to $330.4 million, with its number of active clients down 17% year over year. Net revenue per active client fell 3% year over year, with higher order value and frequency from newer customers. Gross margin expanded 250 basis points to 43.4%, thanks to inventory discipline and lower transportation costs in the period, according to a company press release. Net loss narrowed 45.8% to $35.5 million. The apparel box e-retailer lowered its guidance for the fiscal year, which ends July 31, saying it now expects net revenue to decline 19% to 22%, landing between $300 million and $310 million. Previously the company said net revenue would likely drop 16% to 19%, reaching between $325 million and $335 million. After trying then abandoning a series of changes to its model in recent years, Stitch Fix is back to the drawing board in its attempt to arrest declines and boost sales. Previously, the company had pivoted to emphasize direct sales, an option it calls Freestyle, over its curated boxes, but walked that back as customers became confused and sales dropped. This time, the e-retailer, which sends curated boxes of clothing to subscribers at a cadence of their choice, is overhauling how it onboards new customers and interacts with existing ones.

 

Finance & Economy

Family offices have tripled since 2019, creating a new gold rush on Wall Street

The number of family offices in the world has tripled since 2019, setting off a new race among private equity firms, hedge funds and venture capital firms to attract their investments.  According to a new report from Preqin, the number of family offices — the private investing arms of wealthy families — topped 4,500 worldwide last year. North America has the largest share of family offices, with 1,682. More than half of all the family office assets in the world are in North America.  Experts say family offices now manage $6 trillion or more, and their ranks are growing. There are more than 2,600 billionaires in the world, almost all of them requiring a family office. And the number of people in the world worth $100 million or more — the typical threshold for a family office — has surged to more than 90,000, according to Wealth-X, an Altrata company.

Consumers’ Total Outstanding Credit Leapt $19.5 Billion in January

Consumers’ total outstanding credit leapt by $19.5 billion in January.  Revolving credit accounted for $8.4 billion of the increase, while nonrevolving credit made up the other $11.1 billion, the Federal Reserve said in its monthly report on consumer credit outstanding.  With these increases, total outstanding credit reached $5.04 trillion, according to the report.  The leap in consumer borrowing was higher than that forecast by economists, Bloomberg reported. The median estimate of economists surveyed by the media outlet was for an increase of $10 billion.   The increase in nonrevolving credit was the highest in seven months, and the total credit outstanding in January was the highest ever, according to the report.