E-grocery and restaurant delivery experienced an unprecedented spike in adoption with the start of the coronavirus pandemic, and startups sprang up and partnered with retailers to facilitate getting food to consumers stuck at home. As the economy reopens, however, some are beginning to ask if all the investment in food delivery has created a bubble just waiting to burst.
With venture capital investors throwing money at delivery startups during the pandemic, James Boley of The American Reporter likens the situation to a gold rush, with many speculators anticipating riches and few destined for appreciable returns on their investment. With VC investors failing to look at the stability of the given business models and startups needing to spend money quickly, Mr. Boley sees overhyped investor unicorn delivery startups soon undercut by a drop in food delivery as in-restaurant dining picks up.
Venture capital firms were investing tens and hundreds of millions into delivery startups as recently as late April, according to a CNBC report. London-based Taster received $37 million, Finnish startup Wolt raised $530 million and a project begun by ex-Deliveroo staff called Dija raised $20 million.
As startups jostle to outdo each other and differentiate themselves in the market by providing half-hour and even 10-minute delivery, observers question if new players in the space will eventually outpace demand for the services.
Consolidation already appears to be hitting food delivery, with Uber gobbling up medium-sized delivery players via acquisition and rolling them into its Uber Eats app offering.
Other developments, however, point to the demand for food delivery continuing to remain strong even in regions where lockdown measures have eased.
In the quick-serve restaurant space, major players like McDonald’s have been slow to reopen even as restrictions have been lifted on in-store dining with some franchisees finding drive-through, curbside and delivery-only to be cost effective ways to do business.
The model has grown so popular that municipalities have begun jumping in to protect restaurants that may be losing out from over-dependence on third-party delivery startups. San Francisco recently placed a ceiling on how much delivery apps can charge restaurants per order, according to Eater.
Discussion Questions: Do you think the potential growth and investment opportunities for grocery and restaurant delivery companies has been over-hyped due to the pandemic? How do you see the long-term demand for food delivery shaking out?
Comments from the RetailWire BrainTrust:
At least here in Atlanta, you can easily double the cost of your meal by having it delivered. I don’t know how that is sustainable. My guess is that most of these services will fall by the wayside.
Dr. Stephen Needel, Managing Partner, Advanced Simulations
The days of explosive growth are over, mostly because of renewed demand for in-person dining as consumers crave “normal” experiences. And I expect that the big competitors in this space (GrubHub, DoorDash, Uber Eats and others) will need to renegotiate their rates especially with some bigger national clients. Fees up to 30 percent of volume are tough to swallow in a low-margin business.
But the business model itself is sustainable, for a few reasons:
Dick Seesel, Principal, Retailing In Focus LLC
While pandemic conditions were ideal for food delivery, our hunger for convenience will endure. Time savings, quality options and variety have made food delivery a desirable habit over the past year. It also kept us connected to our favorite local businesses. Many of us will continue to seek these benefits over the long term.
Lisa Goller, Content Marketing Strategist
What you have been seeing is food delivery services expanding into delivering things other than food (prescriptions, hardware, groceries, etc.) I would guess they have to because of the need to continue to build revenue.
Richard Hernandez, Director, Main Street Markets
Let’s be honest, crab cakes via delivery don’t taste like crab cakes at a restaurant. Yes one can settle but most people like their food hot and not wrapped in a series of bags. Yes, flying cars, drones, and deliveries can have profits at some point but for all that money chasing potential it doesn’t seem like profits are on the way any time soon.
Bob Phibbs, President/CEO, The Retail Doctor
Read the entire RetailWire discussion here:
Headline of the Week
Authentic Brands files IPO as it chases more growth
Brand licensing conglomerate Authentic Brands Group has filed papers for an initial public offering as it looks to keep expanding its revenue and intellectual property portfolio. The initial offering is for $100 million, a figure recorded purely for filing purposes and that could increase. The company’s revenue has grown from $1 million in 2010, its founding year, to $489 million in 2020, according to its prospectus. Authentic Brands — which owns or co-owns Forever 21, Barneys New York, Nine West, Nautica, Brooks Brothers, Lucky and other brands — is profitable, too, with $225.3 million in net income in 2020. In a letter to prospective investors, CEO Jamie Salter noted that Authentic Brands has completed more than 30 brand acquisitions, works with more than 700 operating partners globally and generates some $10 billion in gross merchandise value through sales of its brands’ products.
Apparel & Footwear
Adidas auction of Reebok takes a hit as key bidder Authentic Brands drops out
A key bidder has dropped out of the auction for Reebok, making it more likely that German-based Adidas will take an even bigger hit on its disastrous, 15-year stint as the owner of the struggling sneaker brand, The Post has learned. As reported by The Post, Authentic Brands Group — a fast-growing licensing firm whose properties include Forever 21, Brooks Brothers and Nine West — offered about $1 billion for Reebok in the auction’s first round, teaming up with Wolverine Worldwide, the footwear maker behind Merrell shoes, Hush Puppies and Stride Rite. But talks with New York-based ABG recently hit the rocks over Adidas’ demands that ABG operate Reebok as a standalone business, sources said. Instead, ABG’s chief executive — the prolific dealmaker Jamie Salter — had wanted to buy the rights to the Reebok name and integrate its US business with Sparc Group, its joint venture with mall giant Simon Property. Wolverine Worldwide, meanwhile, was planning to help with sourcing manufacturing overseas. The bid from Authentic Brands — which on Wednesday filed plans to go public with the Securities and Exchange Commission — had stood to be the highest for Reebok.
Levi’s Shaking Off Pandemic With Sales and Profit Gains
Levi Strauss & Co. is hitting its stride after a year of COVID-19-driven change. “We’re seeing a really strong recovery, it gives us a lot of confidence going forward,” Chip Bergh, chief executive officer, told WWD after the company posted big second-quarter sales and profit gains. Not only are sales perking back up as COVID-19 restrictions lift in vital consumer markets in the U.S. and Europe, but a few key trends are bringing the market right into Levi’s sweet spot. “During the pandemic about 35 percent of consumers changed waist sizes either up or down,” Bergh said. “That gives people a reason to go out and update their wardrobe. We really are seeing evidence of a new denim cycle here,” said Bergh, noting sales of denim looks have been outpacing apparel by several points. And it’s a looser look that’s ruling now.
PacSun Enters Sneaker Resale Business
Pacific Sunwear of California has launched into the sneaker resale market with PS Reserve. The online shop accessible through its website offers a mix of sneakers, clothing and accessories from Nike, Jordan, Adidas, Supreme, Bape, and Anti Social Social Club, among others. The collection is authenticated through The Magnolia Park owner and CEO Miki Guerra. The streetwear boutique retailer’s flagship location is in Burbank, CA on Magnolia Boulevard, in addition to locations in Buena Park and Canoga Park. The focus will be on footwear with the offerings part of its own inventory, which Pacific Sunwear said will speed turnaround with a middleman authentication process. “The resell market has really changed the footwear industry, and we had been thinking about how to best participate in that evolution through our own lens, in an elevated and authentic way,” Richard Cox, PacSun VP of men’s merchandising, said in a statement.
Mickey Drexler is a CEO — again
One of retail’s most celebrated chief executives is once again running a fashion brand. Mickey Drexler, the former CEO of Gap Inc. and J. Crew, is taking over as CEO of Alex Mill, reported The Wall Street Journal. Drexler is an investor in the clothing brand, which was founded by his son, Alex Drexler. Drexler, who is 76, told the Journal that he has been through many “non-fun periods” in his career, but that he having more fun now than ever because Alex Mill is small enough that he can focus on the details of every garment. “I never want to retire,” he said. Alex Drexler founded Alex Mill in 2012 as a shirt brand for men, with the merchandise sold in upscale companies. The brand was relaunched in 2018 with broader assortments for both men and women and a focus on selling direct to consumers through its own website.
Glen T. Senk Named Executive Chairman of Boden
Glen T. Senk has been named executive chairman of the British clothing and accessories brand Boden, which is aiming to double in size in the medium term. Senk, who for the past four years has served as a non-executive director of Boden, will take up his role this month, leading the business, sharpening the digital offer and gearing for robust growth in underpenetrated markets. He said he plans to beef up the women’s wear assortment, improve digital and customer services and push further into markets where Boden sees big potential, such as the U.S., where the brand has operated since 2002. Boden was born as a mail-order catalogue in 1991, offering a variety of clothing for men, women and children in punchy colors and patterns. It quickly moved into e-commerce, and operates physical stores on the King’s Road and in west London. Senk remains an adviser to Berkshire Partners and sits on the boards of Aritzia and GTI, a leading cannabis company.
Athletic & Sporting Goods
Nike Shares Lose Out to Chinese Sneaker Rivals After Xinjiang Cotton Boycott
A wave of patriotic buying fueled by the Xinjiang cotton controversy is helping shares of Chinese sportswear makers outperform global peers. Chinese consumer support in response to the alleged human-rights issues in Xinjiang region has boosted at least one local sneaker maker by some 250% since the controversy escalated in late March. A Bloomberg gauge of Hong Kong-listed apparel and retail stocks touched the highest level since 2015. And while Nike shares popped after earnings last month, they are only up 20% since end-March. Rising geopolitical tensions over accusations of forced labor in Xinjiang have become a serious threat for global companies trying to operate in China. Firms like Anta Sports Products Ltd. and Li Ning Co., which have supported using materials from the contentious far west region, have gained market share as the Chinese switch away from foreign brands expressing concern.
Intersport to sell The Athlete’s Foot to Arklyz Group
Global performance sports retailer Intersport International Corporation has struck a deal to sell 100% of The Athlete’s Foot retail and e-commerce network to Intersocks-owner, Arklyz Group AG. The sale will allow Intersport to further strengthen its core business to focus on sports performance retail. The deal is expected to close by the end of July. Arklyz will take over the worldwide TAF business, including its trademark rights and all franchise agreements. Intersport acquired The Athlete’s Foot in 2012, with turnover reaching US$400m in 2020. Today, TAF has 564 stores in 32 markets, including Europe, the US, Mexico, Peru, Kuwait, Indonesia, Philippines, Australia, and New Zealand, and operates e-commerce platforms in those markets.
Cosmetics & Pharmacy
Walgreens Boots Alliance’s strong Q3 fueled by COVID vaccines, international growth
Walgreens Boots Alliance beat Wall Street expectations with its third-quarter results, which reflected strong growth internationally from its German joint venture and solid sales growth in its U.S. and U.K. pharmacy operations. For the quarter, WBA’s sales grew by 12.1% year over year to $34 billion and its earnings per share were $1.27, compared with a loss of $2.05 per share a year ago. During the quarter, the company completed its divestiture of Alliance Healthcare to AmerisourceBergen for $6.5 billion, the proceeds from which were used to pay off $3.3 billion in debt and invest in its retail pharmacy and healthcare businesses.
The Vitamin Shoppe, Ghost announce retail partnership
The Vitamin Shoppe is teaming up with Ghost, a company known for its lifestyle sports nutrition products. Through this partnership, Ghost’s products will be available at more than 715 of the retailer’s brick-and-mortar stores, and online as well.
Medly Pharmacy buys pharmacy chain Pharmaca
Digital pharmacy Medly Pharmacy said it’s acquiring Colorado-based Pharmaca, with its 28 locations in the U.S., for an undisclosed price. “Medly is moving into the $1.5 trillion dollar health and wellness industry and stands apart from competitors by positioning itself as the first digital pharmacy to enter the broader health and wellness space on a national scale,” the company said in a statement, with CEO Dr. Marg Patel adding, “this transformative offering will ensure customers can get the full range of their healthcare needs delivered directly to their door. In addition, we look forward to expanding Medly’s presence in the west to become the first digital pharmacy to have truly national reach.”
Discounters & Department Stores
Bloomingdale’s unveils concept store Bloomie’s
As Macy’s continues to experiment with store format, location and size, the company on Wednesday announced the Aug. 26 opening of its new Bloomie’s concept store, according to a press release. The store will open in Fairfax, Virginia, in the Mosaic District shopping center. At 22,000 square feet, the store is significantly smaller than traditional Bloomingdale’s locations and is described as being “ever-evolving,” with a highly curated product collection. The new store touts a “tech-enabled stylist service model,” where in-store stylists can access products from nearby Bloomingdale’s stores, the company website and the flagship store in New York. Fitting rooms will have buttons that shoppers can push for assistance.
Dollar General is trying to get healthier
Dollar General is expanding its assortment of health and wellness products and services, and wants to be a “health destination” for shoppers, according to a Wednesday press release. The company has hired its first chief medical officer, Dr. Albert Wu, who previously worked for McKinsey & Company. Dollar General is also increasing its assortment of dental, nutritional, medical, health aids and feminine hygiene products, among other items, according to the announcement. With more than 17,000 stores, Dollar General sees an opportunity to provide health offerings close to where millions of consumers live — especially in rural communities.
Regional department store Belk on Tuesday announced a senior leadership shakeup, with President and Chief Merchandising Officer Nir Patel replacing Lisa Harper as CEO. Harper, who began her retail career working at her local Belk and has had the top spot since 2016, is now executive board chair, according to a company press release. Don Hendricks will be promoted from chief operating officer to president, replacing Patel in that role. Chris Kolbe, most recently at Kohl’s overseeing that retailer’s private and exclusive brands, replaces Patel as chief merchant.
Nordstrom commits to working with the 15 Percent Pledge for a decade
Nordstrom is the first retailer to sign a 10-year agreement with the 15 Percent Pledge, founded a year ago to address racial inequities in retail. The department store committed to a tenfold increase in purchases from and partnerships with Black-owned or -founded brands by the end of 2030, according to an emailed press release from the nonprofit. In a survey released Wednesday, the group said participating retailers have at least doubled their assortments from Black-owned businesses within six months of taking the Pledge; that companies’ marketing and editorial reforms have boosted brand awareness for Black entrepreneurs by 20 percentage points; and that those addressing hiring have, on average, doubled their percentage of Black employees at director level or higher. The 15 Percent Pledge said that so far it has generated nearly $10 billion in revenue for Black-owned businesses across several sectors including beauty, fashion, retail and media. Ultimately, the group aims to create $1 trillion in economic impact for Black-owned businesses.
Emerging Consumer Companies
Glossier raises $80 million Series E
Glossier Inc., the New York-based digital-first beauty company, raised $80 million in Series E funding. Lone Pine Capital led the round, with participation from existing investors Forerunner Ventures, Index Ventures, IVP, Sequoia Capital, and Thrive Capital. Founded in 2014, Glossier currently sells 39 products—modern essentials spanning skincare, makeup, body and fragrance—at prices between $12 and $60. The company has more than 5 million customers globally.
Brooklinen Announces New Investment from Freeman Spogli & Co.
Brooklinen, Inc., a leading direct-to-consumer brand in the home essentials category, announced that it has secured an investment from Freeman Spogli & Co. The partnership will help support Brooklinen’s continued growth of its direct-to-consumer ecommerce business and accelerate the expansion of its retail and wholesale branches. Existing investor Summit Partners will continue to support the company’s growth. Specific terms of the transaction were not disclosed. “We are excited to partner with Freeman Spogli and to continue our partnership with Summit as Brooklinen rapidly grows,” said Rich Fulop, co-founder and CEO of Brooklinen. “This year we’ve doubled down on our commitment to provide comfort to our customers, and this investment will help us continue to reach them both online and in-person through our expanding retail fleet.”
Eight Sleep secures funding from athletes, investors
Online mattress retailer Eight Sleep says it has raised additional funds from several well-known athletes, actors and business leaders. Notable investors include retired N.Y. Yankees Alex Rodriguez, actor and comedian Kevin Hart, Kris Bryant of the Chicago Cubs, Zack Martin of the Dallas Cowboys, Boston Red Sox outfielder JD Martinez and Naval Ravikant, founder of AngelList, an investment firm interested in startups. This round of investment follows SoftBank’s selection of Eight Sleep as one of the companies to receive funds via a $100 million initiative to support and build a community of Miami-based technology startups. Eight Sleep recently relocated to the city from New York.
Grocery & Restaurants
Fatburger and Hurricane Grill & Wings parent company Fat Brands announced the intention to acquire Global Franchise Group from Serruya Private Equity, Inc. and Lion Capital LLP for $442.5 million in cash and stock. Global Franchise Group franchises and operates quick-service brands Round Table Pizza, Great American Cookies, Hot Dog on a Stick, Marble Slab Creamery and Pretzelmaker. With the acquisition, Fat Brands will own 2,000+ company and franchise-owned restaurants globally with annual total sales of $1.4 billion. “This acquisition is a key strategic milestone for FAT Brands,” Andy Wiederhorn, President and CEO of FAT Brands said in a statement. “We have been very acquisitive in recent years, seeking to add strong and growing restaurant brands to our portfolio. Now that the economy is emerging from COVID-19 and restaurants are rapidly recovering, we are pleased to have reached this agreement to incorporate a powerhouse restaurant franchising group with the support of Serruya Private Equity and Lion Capital. The five new restaurant concepts have been very resilient coming out of the pandemic and will complement our existing brands. Furthermore, we will acquire GFG’s manufacturing operations, which will provide greater efficiencies and incremental revenue opportunities to our company.”
Yum Brands franchisee Ampex Brands acquires Au Bon Pain
Yum Brands and 7-Eleven franchisee Ampex Brands announced Wednesday the acquisition of bakery-café chain Au Bon Pain from JAB Holding-owned Panera Bread. The deal was finalized on June 29 and includes approximately $60 million in assets. Ampex Brands acquired all 171 locations of the bakery-café chain, along with the franchising rights to an additional 131 locations, and the deal is expected to grow the newly minted franchisor’s annual revenue by 10%. Ampex Brands already owns and operates more than 400 locations of Pizza Hut, KFC, Taco Bell, Long John Silver’s and 7-Eleven stores. Ampex’s plan is to first ramp up Au Bon Pain’s existing cafes in the Northeast and Mid-Atlantic regions before turning to expansion strategies, beginning with corporate stores.
Fiesta Restaurant Group is selling fast-casual Mexican restaurant Taco Cabana to YTC Enterprises, an affiliate of 400-unit, Jack in the Box, El Pollo Loco and Denny’s franchisee, Yadav Enterprises, Inc. for $85 million. The sale will help pay for Taco Cabana’s debt totaling $67.6 million. “We made the strategic decision to sell the Taco Cabana business to allow our leadership team to focus completely on accelerating Pollo growth, and we are very excited about the tremendous growth opportunities we have for the Pollo Tropical business,” Fiesta Restaurant Group president and CEO Richard Stockingers said in a statement. “Anil Yadav, the CEO of Yadav Enterprises, has an impressive entrepreneurial background and is a highly-respected restaurant operator with a proven record of success across a variety of limited and full-service concepts. We are confident he will be an effective steward of the Taco Cabana brand for the long-term.” As a result of the forthcoming sale, Fiesta Restaurant Group is investing its time and attention with Pollo Tropical, focusing on creating “an upgraded customer experience across all service channels, continuing to invest in expanding our growing digital platform and finalizing our new unit expansion plans targeted for 2022,” Stockinger continued.
SPB Hospitality agrees to acquire J. Alexander’s in $220M deal
SPB Hospitality, parent to Logan’s Roadhouse and several brewery brands, has agreed to acquire the 47-unit J. Alexander’s Holdings Inc. in a $220 million deal, the companies said Friday. SPB Hospitality, which is moving its headquarters to Houston, said it agreed to pay $14 a share in an all-cash merger with Nashville, Tenn.-based J. Alexander’s, which also owns such steakhouse, pizza and brewery concepts as Stoney River Steakhouse and Grill, Redlands Grill, Overland Park Grill and Merus Grill. SPB Hospitality, which emerged from Craftworks Holdings bankruptcy last year, owns and franchises full-service restaurants, including Logan’s Roadhouse, Old Chicago Pizza & Taproom, Rock Bottom Restaurant & Brewery, Gordon Biersch Brewery Restaurant and specialty restaurant concepts.
Home & Road
Diamond Mattress acquires contract bedding, upholstery manufacturer
The latest Diamond Mattress acquisition gives the West Coast mattress supplier an immediate entrée into the upholstery category. In its second acquisition in as many years, Diamond Mattress has bought Fort Worth, Texas-based contract bedding and upholstery producer Apartment Furnishings Co. Since 2019 when it acquired Royal Sleep, also a Texas company, Diamond Mattress has invested more than $15 million to execute its growth strategy.
RMG acquires upholstery hide division of Carroll Leather
“This acquisition brings together two companies with unique positioning, heritage and experience,” said Matteo Mastrotto, Rino Mastrotto Group CEO. “We were looking to expand our business in the U.S. and we knew Carroll Leather was the company we wanted to target to help us achieve this growth. The combination of our high-quality leather production capabilities and Carroll’s marketing expertise will create the premier leather supplier in the U.S.”
D2C Home Décor Brand The Citizenry To Expand Furniture Line With $20M Funding
Direct-to-consumer (D2C) artisan home décor brand The Citizenry is making a post-pandemic pivot to physical retail stores after a year of rapid growth fueled by the red-hot nesting trend spurred by the pandemic. The brick-and-mortar transformation plan was included in the company’s June 29th announcement that it had received a $20 million investment from consumer goods private equity firm NextWorld Evergreen. In expanding its furniture line, Bentley told PYMNTS, the brand is increasing access to “thoughtfully-crafted” pieces at an affordable luxury price point — something that customers have been clamoring for.
Jewelry & Luxury
The Market For Men’s Jewelry Is Growing—But How Big Will It Get?
Before COVID-19, it seemed like men’s jewelry might be finding a way, at last, to become a bona fide thing. Jake Gyllenhaal was running around New York City in a flashy gold chain. Harry Styles was making pearls chic (the Jonas Brothers also jumped on the pearl bandwagon). Gucci Mane wore a double strand of diamonds to the 2020 Grammy Awards. And chunky gold rings were suddenly everywhere, and not just on Johnny Depp. Would the red carpet wave—coupled with growing consumer demand for fashion that obliterates traditional gender lines—help men’s jewelry become a viable consumer category beyond watches and wedding rings?
Most Jewelry Can’t Be Called “Made in USA” Under FTC Rule
If a jewelry manufacturing plant is located in the United States, that plant can say its jewelry is made in the USA, right? Or at least manufactured in America? And if lab-grown diamonds are created in a U.S. factory, a company can say its stones are produced here, right? In most cases, the answer is likely no. In fact, under a rule just passed by the Federal Trade Commission, very few jewelry products can make a straight-up “Made in the USA” claim, says Sara Yood, deputy general counsel of the Jewelers Vigilance Committee. For a long time, the FTC’s guidance has been clear: For a product to be labeled “Made in the USA,” not only must “significant processing” take place in the United States, but “all or virtually all” of its component parts must be produced here too.
Shopping for High-End Brands Is Harder Than It Looks—Even if You’re a Luxury Giant
To get his hands on Bulgari, luxury-goods titan Bernard Arnault courted the family behind the jeweler for 12 years before they accepted a check for $5 billion. The pandemic may soften up some owners of high-end brands, but it will still be hard to cut deals. A pre-existing gap between the performance of many big and small designer brands has widened since the pandemic began. A major market share grab is under way and “some of the small guys are getting killed,” says Jefferies luxury analyst Flavio Cereda. One Chinese mall operator told Mr. Cereda that the top 10 brands have gone from contributing 45% of total luxury sales before the pandemic to 70% today, as more minor players are squeezed. The trend was clear in the first three months of the year, when shoemaker Tod’s sales dropped 16% and those of British trench coat designer Burberry fell 5% against the same period of pre-pandemic 2019. Industry giants Hermès and LVMH Moët Hennessy Louis Vuitton, which Mr. Arnault founded, showed sales growth of 33% and 8% respectively on the same basis.
Luxury Brands Are Embracing Circular Fashion
It used to be that buying clothes secondhand was the domain of vintage lovers or those simply looking for a more affordable price tag. The pursuit required sifting through racks and, for committed thrifters, visiting multiple consignment shops. Today, thanks to digital resellers, buying secondhand has gone mainstream. In fact, by 2023 more than a quarter of the pieces in our closets could be pre-owned. That stat is courtesy of a 2020 study by Boston Consulting Group and Vestiaire Collective, the Paris-based luxury resale platform. “Secondhand businesses like Vestiaire Collective and the RealReal are helping to define a new era where secondhand is as good as, if not better than, new,” says Maxine Bédat, founder and director of the fashion policy think tank New Standard Institute and author of the new book Unraveled: The Life and Death of a Garment, which examines the environmental impact of shopping.
Office & Leisure
Global investment firm Z Capital Partners, the private equity arm of Z Capital Group, has completed the merger of its affiliated portfolio companies, Affinity Gaming, a diversified national casino gaming operator, and Sports Information Group, the B2B and B2C global omnichannel sports, technology, digital, media and wagering business. The newly merged entity, badged Affinity Interactive, has offerings in regional gaming and horse wagering, and is soon to launch social gaming, igaming, and sports betting, potentially reaching one million customers across the US alone. With regional casinos in Nevada, Missouri and Iowa, and its own technology, digital and media platforms and online betting presence, the company claims to be positioned to capitalize on the continued momentum in sports betting and igaming globally. James Zenni, Founder, President and CEO of ZCG and Chairman of Affinity Interactive, stated: “We look forward to delivering on the many opportunities ahead as we leverage Affinity Interactive’s offerings and become the premier gaming, digital and media platform.”
Hilton does away with daily housekeeping for most U.S. hotels
Hilton has made daily housekeeping optional across most of its brands in the U.S. Effective this week, daily housekeeping will be performed only upon request. Luxury brands Waldorf Astoria, Conrad and LXR are exempt from the new policy. Housekeeping services also will be done automatically on the fifth day of any extended stay at a U.S. hotel. Meanwhile, Hilton properties in Europe, the Middle East and Africa are currently “operating housekeeping as requested,” while hotels in the Asia-Pacific region are still providing daily housekeeping, according to a Hilton spokeswoman. Though on-demand housekeeping services have become commonplace during the pandemic, Hilton is one of the first major hospitality players to make it companywide policy. The shift away from daily housekeeping has emerged as a flash point in the industry, with some hospitality union groups arguing that less frequent room cleanings create more challenging work for housekeepers while threatening their job security.
Bank of America Refinances JOANN’s Covenant-lite First Lien Term Loan
JOANN, the nation’s category leader in sewing and one of the fastest growing competitors in the arts and crafts category, successfully completed the refinancing of its existing covenant-lite first lien term loan facility due October 2023. Bank of America acted as administrative agent, collateral agent and lender according to the 8K filed with the SEC. The impact of the new $675 million covenant-lite first lien term loan facility is leverage neutral for JOANN as net proceeds will be used to fully repay existing borrowings under the prior first lien term loan facility, with the balance reducing the amount borrowed on its existing asset-based revolving credit facility. The new first lien term loan facility matures on July 7, 2028 and lowers the applicable rate by 25 basis points to LIBOR plus 4.75%. The revised pricing terms also reduce the LIBOR floor by 25 basis points to 0.75%.
Technology & Internet
Judge dismisses FTC and state antitrust complaints against Facebook
A federal court last week dismissed the Federal Trade Commission’s antitrust complaint against Facebook, as well as a parallel case brought by 48 state attorneys general, dealing a major setback to the agency’s complaint, which could have resulted in Facebook divesting Instagram and WhatsApp. Shares of Facebook rose more than 4% following the rulings, sending the social media company’s market capitalization above $1 trillion for the first time. The FTC sued the company last December, alongside attorneys general from 48 states, arguing that Facebook engaged in a systematic strategy to eliminate threats to its monopoly, including the 2012 and 2014 acquisitions of Instagram and WhatsApp, respectively, which the FTC previously cleared. However, the court ruled that the FTC failed to prove its main contention and the cornerstone of the case: that Facebook holds monopoly power in the U.S. personal social networking market. The court found the FTC did not provide enough detailed data to prove Facebook has market power in the loosely defined market for personal social networking services. The ruling is not necessarily the end of the case. The court acknowledged that the FTC may be able to cure the weaknesses in its argument, so it left open the possibility that it could file an amended complaint and continue the litigation.
Etsy acquires Elo7, known as the ‘Etsy of Brazil,’ for $217M
On the heels of Etsy’s huge deal to acquire Depop to open the door to more social selling, target younger users and deeply expand in Europe, the crafty marketplace has announced another significant deal to build out its reach, this time in Latin America. Etsy has announced that it will acquire Elo7 — commonly referred to as the “Etsy of Brazil” for its popular marketplace for crafty creators — for $217 million. Etsy was already active in Brazil, but Elo7, one of the 10 biggest e-commerce sites in the region with 1.9 million active buyers, 56,000 active sellers and some 8 million items for sale, will give Etsy a significantly bigger presence in the market. As with Depop (which was a $1.6 billion acquisition for Etsy) and Reverb (a musical instruments market Etsy acquired in 2019), Elo7 will remain a standalone brand and continue to be operated by its current management team out of its HQ in Sao Paulo, Brazil.
Finance & Economy
New study finds a 13% increase in average retirement savings year over year, up to $98,800
Over a year since the pandemic put millions out of work and onto government aid, Americans’ finances are reportedly bouncing back. More than half of Americans say they’re in financial recovery mode, according to Northwestern Mutual’s latest 2021 Planning & Progress Study that surveyed 2,000-plus American adults in March 2021. The annual study found that both personal savings and retirement nest eggs have grown year over year: Average personal savings have increased over 10% ($65,900 to $73,100), while average retirement savings have seen a bigger jump of 13% ($87,500 to $98,800).
10-year Treasury yield falls to 1.25% amid concerns about economic growth, Covid variant
The 10-year U.S. Treasury yield fell as low as 1.25%, its lowest point since February, continuing a sharp reversal in the bond market amid growing concern about the pace of the global economic recovery. “This decline in bond yields could be signaling that the inflation burst is transitory, and/or that the Delta variant will slow growth, although at 1.25% that seems extreme,” Ed Hyman, founder and chairman of Evercore ISI and head of economic research, said in a note. Weekly jobless claims report indicated a slowdown in job growth. First-time applicants for unemployment benefits unexpectedly jumped to 373,000 in the week ending July 3. Economists were looking to see 350,000 initial claims, according to Dow Jones.
