The Big Story

CGBS Presenter Profiles: Kid Made Modern and Andie

Consensus

We are excitedly counting down the final days until the Consensus Great Brands Show (CGBS), which will take place this week, on September 25th, at the New York Times TimesCenter in Manhattan – http://greatbrandsshow.com/. All summer, we have used this space to profile the different companies that will be taking the stage. As we profile our final two presenters, we hope that these previews underscore our growing anticipation for this year’s show and give you a head start on learning about these dynamic brands and entrepreneurs.

Kid Made Modern

Founded in 2010 by renowned designer Todd Oldham, Kid Made Modern is an oasis for children from the modern-day overload of plastics and screen time. Rooted in arts and crafts, but spanning multiple categories of products, Kid Made Modern celebrates the self-discovery and growth that comes from creative play and learning. By emphasizing natural and recycled materials, Kid Made Modern creates fun projects that have multi-faceted, positive outcomes – all intended to stoke children’s interests and to connect them more personally to the world.

The company has hundreds of products across a number of categories in the market today, including arts and crafts, garden, home décor, and apparel. In addition to an expansive assortment of physical products, the company has also begun to develop media, entertainment, and educational content. These initiatives have shown promise and involve world-class retail and strategic partners.

Today, the company is led by the former executive team of Land of Nod, Crate and Barrel’s children’s business. Headquartered outside of Chicago, Michelle Kohanzo, former CEO of Land of Nod, is now CEO of Kid Made Modern. Under Michelle’s leadership, the company is positioned to reach new heights.

Michelle will present on behalf of Kid Made Modern at the Great Brands Show on Wednesday, September 25th.

Andie

Andie is the leading digitally native women’s swimwear brand. Founded in 2016, the company designs, manufactures, and ships swimwear to its customers, owning the entire digital and home try-on experience. As a result, it makes a luxury product and experience affordable, bringing high-end quality swimwear to women at approachable prices.

Andie’s founder, Melanie Travis, built her career at some of New York City’s most successful consumer technology companies, including Foursquare, Kickstarter, and most recently Bark & Co. She has said that “the swimwear shopping experience is broken,” and “swim is such a vulnerable purchase.” To help solve that, Andie is all about making swimwear shopping easy – making shopping for the right swimsuit a simpler and more enjoyable process.

Design focuses on products that are timeless and elegant, but also practical and versatile. The company offers one and two-piece suits and a Fit Quiz to help shoppers find the Andie style that might work best for their individual body-type and personal style. Andie offers free shipping, returns and exchanges.

In June of 2019, Andie launched its first marketing campaign, which included subway ads and billboards, to help connect with consumers outside of its digital advertising efforts. For some products, the waitlist has grown to more than 10,000 people.

Melanie will present on behalf of Andie at the Great Brands Show on Wednesday, September 25th.

 

 

 

Headlines of the Week

Toys ‘R’ Us partners with Candytopia on new, experiential pop-up concept

Toys “R” Us continues its comeback, this time with an entirely new kind of experience. Tru Kids, the new parent company of Toys “R” Us, and Candytopia, famous for its experiential candy exhibits, have joined forces to open an immersive experience dubbed “The Toys “R” Us Adventure.” The new concept will debut in late October at Brookfield Properties’ 830 N. Michigan Avenue in Chicago, and at Edens’ Lenox Marketplace in Atlanta. The two locations will remain open through the holiday season before moving to other major U.S. cities in 2020. The new concept will feature a series of interactive play rooms and installations featuring Toys “R” Us mascot, Geoffrey the Giraffe, and toy vendors such as Melissa & Doug and Spin Master’s PAW Patrol brand.

Madewell IPO may be in limbo as talks with lenders break down

Crew’s attempt to execute a simultaneous spinoff and initial public offering of its Madewell brand may have hit a roadblock, as talks “with certain holders of loans and securities” have ended with no agreement reached and no further discussions scheduled, according to documents filed last Friday with the Securities and Exchange Commission. The company filed that disclosure, along with its own proposal delineating how debt would be traded for a stake in the new Madewell entity and the lenders’ proposal, on the same day the IPO paperwork was filed. Because the lenders as a group, as part of a debt swap last year, had stipulated that the company needed their permission before selling Madewell or taking it public, the two sides’ failure to agree could imperil the IPO, according to the Wall Street Journal’s Bankruptcy report, which first noted the disclosure’s implications.

 

 

Apparel & Footwear

Destination Maternity considers possible sale after dismal Q2

Destination Maternity is exploring a possible sale or merger in addition to “value-enhancing initiatives” should the company remain independent. The latter includes capital structure “optimization,” as well as the sale or disposition of some business assets, the company said Tuesday. No timeline was set for the strategic review. The announcement comes as second quarter sales fell nearly 12% year over year to $84.9 million. Driving the decline were 61 store closures in Q2 and a 10.5% drop in comparable sales. Board member Lisa Gavales, who currently serves in the retailer’s “Office of the CEO” while it looks to replace Marla Ryan, said on a conference call that the company’s Q2 results “illustrate the challenges that persist across the business.” The company has been struggling with sales losses for years now. As it tries to adjust, it has closed 177 total stores since last August, but closures and layoffs have not been enough to stabilize the company’s finances.

‘Devastating to small companies’: How fashion brand Lafayette 148 is dealing with tariff changes

A major theme of the Trump presidency so far has been the ongoing turmoil with China over trade. The recent tariff raises from the Trump administration, which saw a 10% increase in tax on certain imports from China including apparel and footwear, are one such result of this conflict. Those tariffs have fashion brands, particularly smaller ones like Lafayette 148, concerned for their futures. “Tariffs on goods imported from China are devastating to small companies like us,” said Deirdre Quinn, CEO and co-founder of Lafayette 148. “They have added millions to our cost of goods that we can only gradually factor into the prices of our collection, if at all. The recent changes are unbearable because of their scope and suddenness. All the goods that we import from China will be subject to heavy tariffs.”

This brand wants to be the next Zara. It also wants to stay green

Reformation wants to be fast fashion. It also wants to be sustainable. As the LA-based women’s brand expands internationally, it’s figuring out how to be both. Created as a vintage shop, founder and chief executive Yael Aflalo launched a direct-to-consumer site and a fleet of boutiques in 2013. The brand’s attempt to merge a California cool girl aesthetic with environmental responsibility has driven sales growth of 60 per cent year-on-year since 2014, with revenues expected to hit just over $150 million this year, according to Aflalo. “We are Zara but with a soul,” says Aflalo. “People love Zara, but the issue is that they don’t feel like Zara shares their values from a sustainability and inclusivity perspective.” To become a “next-generation Zara”, Reformation is building a competitive production cycle, launching more products and opening more stores.  But the more a company mimics a fast fashion brand, the more challenging it is to be sustainable.

 

Athletic & Sporting Goods

Fanatics hires Nike exec as CFO; business is targeting over $2.5 billion in sales this year

Fanatics has hired Nike’s corporate audit and chief risk officer, Michener Chandlee, who’s been with the athletic apparel giant for more than a decade, to become its chief financial officer, succeeding Lauren Cooks Levitan.  Chandlee’s hiring comes as Fanatics is targeting sales of more than $2.5 billion this year, up from $2.2 billion in 2018.  The sports merchandise company, valued at $4.5 billion, was launched by Michael Rubin in 2011. It has raised $1.7 billion to date, which includes backing from SoftBank Group’s Vision fund.

adidas Loses Infringement Battle to Japan Brand’s Two-Stripe Trademark

Following a trademark infringement battle loss to Shoe Branding Europe BVBA over its three-stripe logo just a few months ago, adidas once again takes a similar “L,” this time to Marubeni Footwear. adidas’ fight to protect its three stripes was directly brought to the Japanese Patent Office (JPO)’s attention after the company attempted to squash Marubeni’s registration for a diagonal two-stripe trademark.  adidas believes that Marubeni’s two-stripe trademark would give customers the “same impression” as adidas’ three-stripes “since each stripe is depicted in the same direction, width and shape,” making the two logos almost identical besides the stripe count difference.

Cosmetics & Pharmacy

Venus Williams Invests in Zeel

Venus Williams is continuing her wellness investing streak with an investment in Zeel, an on-demand massage business. As part of the deal, Williams is joining the company’s board and will help Zeel roll its sports stretching and massage offerings deeper into the professional athlete community. The Zeel deal comes a few months after Williams invested in personal-care line Asutra, where she became chief brand officer. She also has her own interior design business, and an activewear line. At Zeel, Williams will help the business integrate further with big sports organizations like the National Football League, National Basketball Association and United States Tennis Association. Zeel has been growing quickly, and now has over 11,000 massage therapists. This year, the company is projected to give more than 1 million massages.

Madison Reed in new move to expand to hundreds of locations

Online start-up Madison Reed is adding a new approach as it looks to aggressively — and quickly — expand its brick-and-mortar network. The hair color brand announced plans to franchise its Madison Reed Color Bars under a joint venture with Franworth, a franchise consulting firm. Madison Reed, which makes and markets its own hair color products, is believed to be the first digitally native vertical brand to use the franchise business model as a growth strategy for local brick-and-mortar retail. The company said it expects to have roughly 100 company-owned stores and 500 franchises (either sold or up-and-running) in four years.

Walgreens will be first retailer in U.S. to test on-demand drone delivery

Walgreens is set to lift off and make history with a drone pilot in Virginia. Beginning in October, the drugstore giant and Wing Aviation, a subsidiary of Google parent company Alphabet, will partner on a pilot of “store to door” delivery of health and wellness, food and beverage and convenience items via drone delivery. (Prescription deliveries are not available in the pilot.) According to Walgreens, customers will receive their orders within minutes of placing orders. The pilot will make Walgreens the first retailer to offer on-demand drone delivery service in the U.S.

 

Discounters & Department Stores

Macy’s to make same-day delivery free in 30 markets, for a limited time

Macy’s announced that starting Oct. 1, same-day delivery will be available in 30 markets nationwide on orders of $75 or more, without the company’s usual $8 fee. The department store said in an email to Retail Dive that the pilot will last for a limited time, the duration yet to be determined. Same-day delivery of online orders at Macy’s and Bloomingdale’s was first launched in 2014, and offered in 33 markets by 2017. Macy’s Chief Product and Digital Revenue Officer Jill Ramsey unveiled the new initiative at the WWD Digital Summit, according to the email. Customers who choose same-day delivery at checkout on qualifying orders placed by noon local time Monday through Saturday or 10 a.m. local time on Sunday, will receive items the same day. Orders placed after the cut-off times will be delivered the following day.

Walmart reimagines once-defunct Scoop as private label fashion line

Walmart has brought the Scoop brand back as a private fashion apparel line. The defunct boutique retailer has its name on more than 100 products with prices ranging from $15 for a T-shirt to $65 for a coat, according to a blog post from Walmart’s e-commerce head of fashion Denise Incandela. Items are currently available online at Walmart’s website. Incandela said Scoop-branded items would come to Walmart stores early next year.

Stage Stores goes all in on off-price

Stage Stores Inc. will close about 40 stores as part of a plan to substantially convert to its off-price Gordmans banner. Stage plans to begin converting its remaining department stores in February 2020, and expects to be operating approximately 700 predominantly small-market Gordmans off-price stores by the third quarter of fiscal 2020. A limited number of stores may continue to operate under their existing department store nameplates until closure is permitted by lease. As part of the conversion, the company plans to close approximately 40 stores during fiscal 2020. Capital spend in fiscal 2020, inclusive of all conversion activities, is expected to be approximately $30 million. “We are excited about our future as we fully transition to an off-price business model,” said Michael Glazer, CEO, Stage Stores Inc. “Compared to their performance as a department store, off-price conversions have consistently delivered higher sales with less inventory, similar retail margins, and lower SG&A. “

 

Emerging Consumer Companies

Thakoon relaunches online, now led and owned by Naadam

After a two year hiatus, Thakoon has relaunched, offering affordable basics for the fashion-conscious direct-to-consumer customer, at a slightly higher price point than Everlane and Uniqlo. Prices range from $75 to $250. Thakoon plans to sell products online and in company-owned retail stores. The company is now owned by Naadam and will be led by Naadam CEO Matt Scanlan.

Pattern, the evolution of agency Gin Lane, launches Equal Parts

Pattern, the company founded by the team at Gin Lane with aims to launch a multitude of digitally-native products companies, has introduced its first brand, Equal Parts. Equal Parts will offer five sets of cookware made from sustainable materials. Each order will also come with eight weeks of text-based guidance from a cooking coach.

Casper introduces CBD gummies

Casper hopes to help consumers sleep even before lying down on one of its beds. The mattress brand is launching a new line of CBD gummies, called PLUS sleep, in partnership with the cannabidiol company Plus. The gummies contain 25 milligrams of CBD and one milligram of melatonin. A 14-gummy tin costs $35.

 

 

Grocery & Restaurants

Evergreens and Garden Bar to merge

Seattle-based health-oriented concept Evergreens has purchased a similar concept, Garden Bar in Portland, Ore., for an undisclosed sum, the two chains announced. Garden Bar is being renamed Garden Bar by Evergreens. There are currently 18 Evergreen restaurants and nine Garden Bars. Both chains are customizable salad concepts with a focus on health, nutrition, seasonality and sustainability.

Blue Bunny manufacturer to acquire Halo Top

Well Enterprises, Inc., has entered into a purchase agreement with Eden Creamery, L.L.C. to acquire the Halo Top brand. The transaction, which is expected to close this month, expands Wells’ portfolio to five distinct ice cream brands. Financial terms of the transaction were not disclosed. Wells is the second largest ice cream manufacturer in the United States.

Fairfield Gourmet acquires Foxtail Foods

Fairfield Gourmet Foods Corp., parent company of David’s Cookies, has acquired Foxtail Foods, a producer of baked and unbaked pies, cookie dough, muffin batter, pancake mixes and other dessert items. Financial terms of the transaction were not disclosed. Foxtail Foods operates a 120,000-square-foot facility in Fairfield, Ohio. The company has been an exclusive supplier to Perkins Restaurant & Bakery and Marie Callender’s Restaurant & Bakery and has built a presence in food service under the Foxtail brand. In August, Perkins and Marie Callender’s, L.L.C. filed for bankruptcy protection, announcing plans to sell its Perkins business and a segment of its Foxtail bakery business.

Home & Road

Alessi Gets Boost from Oakley Capital

British investment firm Oakley Capital has completed its investment in Alessi S.p.A, the nearly century-old Italian high-end housewares company. Oakley acquired 40 percent of the capital and has entered into a minority shareholder position, underwriting an increase in investment capital for Alessi. Oakley’s strategy, according to a news release, will focus on further strengthening and expanding the brand by targeting new audiences and optimizing the mix of products, pricing and distribution. Alberto Alessi will continue as president, responsible for products, brand identity and design. Alessi began its search for an investment partner a couple of years ago and went through a restructuring process in January, aimed at streamlining costs and making the business more sustainable, which resulted in 81 voluntary agreements to exit the company. The restructuring, according to the company, was carried out in collaboration with the VCO Industrial Union and trade unions, which assisted workers.

Crate & Barrel to expand restaurant concept

Crate & Barrel’s foray into hospitality appears to be paying off. The home furnishings retailer is expected to open up to 15 in-store full-service restaurants, reported Fortune In July. Crate & Barrel, in collaboration with Cornerstone Brands, opened its first-ever restaurant, “The Table at Crate,” in its store at Oakbrook Center, Oak Brook, Ill. The restaurant integrates the dining and retail experience across two levels of indoor and outdoor space. Most of the featured tableware, chairs and table are for sale in the store. Crate & Barrel decided to expand the concept based on the performance of the Oakbrook site, the report said. “It was a win right out of the gate,” Neela Montgomery, CEO of Crate & Barrel,” said at Fortune’s MPW International Summit in Toronto. “It was profitable in the second month.”

America West to acquire Sun Delivery

Two major specialized furniture carriers will combine forces Oct. 1 when American West Worldwide Express closes on an acquisition of Sun Delivery. The deal, for which terms weren’t disclosed, hooks Sun’s final-mile network into that of American West, whose services range from full-truckload to LTL to white-glove home delivery. The news came in a joint announcement from Sun Delivery CEO Rick Phillips and Josh Brown, CEO of American West. The acquisition unites two strong brands that have served the furniture industry for decades, forming one of the largest specialized furniture carriers in North America.

Jewelry & Luxury

Ross-Simons Purchases Majority Stake in Luca + Danni

Jewelry retailer and catalog company Ross-Simons has bought a majority stake in “meaning” jewelry brand Luca + Danni. It’s all part of the new $6.2 million round of funding for 5-year-old Luca + Danni, which includes fresh capital injections not just from Ross-Simons but also from Boston-based venture capital fund PJC. PJC first invested in the brand three years ago and will retain a minority stake in the company. Luca + Danni founder Fred Magnanimi will remain chief executive officer of the company and board member, and he also retains an ownership stake.

Alex and Ani Has Restructured Its Debt

Alex and Ani has agreed to a new debt structure with its syndicate of lenders led by Bank of America, the company said in court papers filed Aug. 30. The assertion was made in a court filing that was part of the charm brand’s ongoing legal battle with KJ Brands, its former distributor for Australia, New Zealand, and Fiji. Alex and Ani’s income averages around $15 million a month, according to an affidavit from chief financial officer Andrea Ruda.

Charming Charlie Is Poised to Rise Again

New Charming Charlie stores will open starting next year, says Charlie Chanaratsopon, the chain’s founder and namesake, who last week won an auction for the intellectual property of the currently closed chain. A spokesperson tells JCK that Chanaratsopon plans a three-prong strategy to revive the retailer: “Building the brand’s digital presence and digital marketplace, developing brand collaborations and brand pop-ups, and opening select retail brick-and-mortar locations with real estate partners. “Consumers can expect smaller to mid-size stores starting in 2020,” the spokesperson added. Chanaratsopon’s company, Houston-based CJS Group, paid $1.13 million for the retailer’s intellectual property in a Sept. 11 auction. The company had filed for bankruptcy in June and liquidated soon after. A Delaware bankruptcy court approved the purchase.

A No-Deal Brexit Will Cost the UK Luxury Sector Billions. So, Why Are These British Brands So Relaxed?

As of press time, leaving with a free trade deal, no deal and even a second referendum all remain possible outcomes. So, all quite simple, eh? But where does all this leave British luxury? Where do all these possible outcomes leave the likes of Burberry, Bentley, Barbour, Dunhill, Harrods and Hackett, not to mention the country’s smaller domestic success stories, such as Private White V.C. and numerous Jermyn Street establishments? Earlier this year Walpole, the official sector body for over 250 of the UK’s finest luxury brands, commissioned research suggesting a £6.8 billion ($8.5 billion) loss from a no-deal Brexit. As alarming as that number is, it may reflect only a sliver of the damage. “That figure concerns exports, primarily to the EU, but also includes lost exports to South-East Asia,” the body’s CEO Helen Brocklebank tells Robb Report. “That’s not a loss in investment, or the cost implications of having to get your raw materials into Britain for your production—that’s just the loss of export sales. So, it’s just scratching the surface of the damage a no-deal Brexit does to the British luxury sector.”

 

Office & Leisure

Chewy posts $82.9M loss in Q2

Chewy on Tuesday reported second quarter net sales rose 43% to $1.15 billion from $805.6 million in the year-ago quarter, beating analysts’ expectations of $1.13 billion. The company’s net loss widened 31.3% to $82.9 million, which missed Wall Street’s expectations “by nearly $40 million driven almost entirely by stock-based compensation expense,” of $42.8 million, according to a note from William Blair analyst Dylan Carden. Gross margin expanded 300 basis points from last year to 23.6%. For the full fiscal year, the company expects net sales to be between $4.75 billion and $4.8 billion, a 35% to 36% growth rate year over year. Executives on the call appeared confident in the pet e-tailer’s business, prompting the company to raise its outlook. CEO Sumit Singh said Autoship subscription service customers drove significant sales.

SeaWorld’s CEO quits after 7 months on the job

SeaWorld CEO Gus Antorcha, who took over the Orlando-based company in February, abruptly resigned Monday after feuding with the board of directors. “Mr. Antorcha informed the Company that his resignation was due to disagreements over the Board’s involvement in the decision making at the Company,” SeaWorld said in a new SEC filing. Antorcha, 45, is a former cruise line executive who started his $600,000 a year job on Feb. 18. He is not entitled to nor seeking severance benefits, the SEC filing said. “While I may have a difference of approach, I continue to believe in SeaWorld’s strategy, mission, team and prospects,” said Antorcha in a prepared statement. “It’s a surprise,” said Bob Boyd, a theme-park analyst at Pacific Asset Management. “It is kind of another hiccup in what’s been a lot of hiccups over the years for SeaWorld.”

Technology & Internet

Amazon will start letting people pay with cash because not everyone has credit cards

When Amazon announced a new pay-with-cash option for its online shoppers on Wednesday, the name “Walmart” didn’t appear anywhere in its press release. But the introduction of the new service in the US — called Amazon PayCode — is just the company’s latest attempt to appeal to lower-income shoppers in the US who have long turned to low-price retail chains like Walmart instead of Amazon. With PayCode, online shoppers can complete an order on Amazon and then pay for that order in cash in the next 24 hours at one of 15,000 Western Union locations.

 

Congress looks to hear from Amazon customers

A House panel investigating big tech companies for potential antitrust violations is seeking information from customers of Amazon.com Inc., Apple Inc., Google and Facebook about the state of competition in digital markets and the adequacy of existing enforcement. It’s the latest development in the bipartisan congressional investigation being conducted by House antitrust subcommittee chair David Cicilline, a Democrat from Rhode Island.

 

Facebook working on smart glasses with Ray-Ban, code-named ‘Orion’

Facebook has been working to develop augmented reality glasses out of its Facebook Reality Labs in Redmond, Washington, for the past couple of years, but struggles with the development of the project have led the company to seek help. Now, Facebook is hoping a partnership with Ray-Ban parent company Luxottica will get them completed and ready for consumers between 2023 and 2025, according to people familiar. The glasses are internally codenamed Orion, and they are designed to replace smartphones, the people said. The glasses would allow users to take calls, show information to users in a small display and live-stream their vantage point to their social media friends and followers. The company has hundreds of employees at its Redmond offices working on technology for the AR glasses, but thus far, Facebook has struggled to reduce the size of the device into a form factor that consumers will find appealing.

 

Fitbit soars as it hires Qatalyst to explore sale

Fitbit has hired boutique investment firm Qatalyst Partners to explore a sale, according to a person familiar with the matter.  Qatalyst has urged Fitbit to consider a sale of the business for several weeks, saying it could garner interest from the likes of Google and private equity firms, according to Reuters. The company maintains a foothold in the fitness tracker market but it has stumbled in its recent move to smartwatches. Additionally, Fitbit’s business continues to suffer and it faces steep competition from device makers such as Apple.

 

Finance & Economy

US existing home sales rise to 17-month high in August

U.S. home sales unexpectedly rose to a 17-month high in August for a second straight month of gains, the latest sign that lower mortgage rates are encouraging buyers off the sidelines.  Existing home sales make up about 90 percent of U.S. home sales.  A decline in mortgage rates throughout much of the summer has helped buyers. The U.S. Federal Reserve cut interest rates for the first time in more than a decade in July and lowered borrowing costs again.

US consumer sentiment jumps as confidence around the economy rises

Sentiment in the U.S. rose more than expected this month as consumers felt more confident about current and future economic conditions, according to preliminary data released by the University of Michigan.  However, while consumers feel more confident about the economy, worries about the impact of tariffs on the economy increased in early September. Richard Curtin, chief economist for the Surveys of Consumers, said 38% of all consumers made “spontaneous references to the negative impact of tariffs, the highest percentage since March 2018.”

Retail sales gains moderate in August

Talk of a recession or some form of economic slowdown and head-spinning policy changes on tariffs aren’t weighing on the U.S. consumer all that much, thanks to high employment and “modest wage gains,” according to GlobalData Retail Managing Director Neil Saunders.  The moderation in sales gains noted in August showed some of that confidence already ebbing, at least somewhat, according to NRF Chief Economist Jack Kleinhenz.