The Big Story

Clicks to Bricks is Back on Track

Paul Alexander

With digitally native darlings Warby Parker and Allbirds preparing to make their initial public offerings this week and later this fall, respectively, the companies’ regulatory filings point to the return of a recent trend in consumer retail: clicks to bricks. Clicks to bricks, or digitally native brands opening brick and mortar stores, was building momentum in the latter part of the last decade, but the COVID-19 pandemic forced many companies last year to rethink their plans due to lockdowns and general uncertainty. Over the ensuing months, physical retail struggled mightily, while shoppers flocked online (U.S. ecommerce retail sales increased 43% y/y to $861 billion in 2020, according to Digital Commerce 360). Some industry observers mused that consumers’ adoption of ecommerce advanced five years in the span of 12 months during the pandemic. With that growth and increased market share, it was unclear whether ecommerce brands would still feel the need to open as many physical stores. Warby Parker and Allbirds are now among several examples that indicate clicks to bricks is back.

At the highest level, digitally native retailers are back to opening stores because virtually everyone is back to opening stores. A Coresight Research report issued last month examining the plans of roughly 60 U.S. retailers found that store openings are up 48% y/y, driven by dollar stores, offpricers, beauty retailers, discounters and grocery. Digitally native brands are contributing to the openings as well; Warby Parker expects to open 30 to 35 locations this year, and Allbirds, which currently has 27 locations, plans to accelerate its expansion to “hundreds of potential locations.”

However, the deeper, enduring driver behind clicks to bricks is that many retailers struggle to scale quickly and profitably through ecommerce alone. While Warby Parker grew sales in 2020 by 6% to $394 million, it reported a net loss of $56 million, and adjusted EBITDA of only $8 million. For its part, Allbirds reported sales growth of 13% in 2020 to $219 million, but generated net losses that widened from $15 million in 2019 to $26 million in 2020. Warby Parker’s and Allbirds’s experiences are not outliers among digitally native brands – last month, digitally native luxury consignment platform The RealReal also reported strong second quarter sales growth but still-widening losses. The rising cost of digital marketing, driven by growing competition, is one of the obstacles these companies face in trying to turn a profit. Google parent Alphabet reported that its second quarter cost per click increased 31% y/y and cost per impression was up a whopping 63%. Similarly, Facebook reported average price per ad was up 47% in the second quarter.

The hope behind the clicks to bricks trend is that physical locations can be a more cost-effective method of customer acquisition than digital marketing and help these companies get to profitability. While stores are largely burdened by fixed lease obligations, they also raise brand awareness in their local markets and drive customer acquisition. For example, Allbirds has reported that its Boston Back Bay store resulted in 15% higher web traffic and an 83% increase in new customers from the area in the months after it opened. Additionally, stores offer a more immersive experience than shopping online, which can help build brand loyalty and increase convenience for customers.

The list of digitally native retailers getting back into opening stores is substantial, including Bonobos, Fabletics, Rhone, Glossier, the RealReal, Away Luggage, and Everlane, whose founder and CEO famously said in 2012 that he’d rather “shut the company down” than open a store (Everlane today has eight stores with another on the way this fall). Others, including ThirdLove and Casper have signaled that they are contemplating reaccelerating store openings. And, as the Wall Street Journal reported last week, the goliath of all digitally native retailers, Amazon, is currently developing plans for an Amazon department store aimed at boosting the profile and sales of its private label brands, particularly in apparel. If Amazon is opening department stores, there is no clearer sign that clicks to bricks is alive and well.

Headline of the Week

WBA makes $970M majority investment in Shields Health Solutions

Walgreens Boots Alliance, via Walgreens, is investing nearly $1 billion in specialty pharmacy care company Shields Health Solutions. WBA’s $970 million investment gives it a majority share in the health system-owned with the aim of accelerating the development of innovative healthcare models and creating a platform to develop health system partnerships and coordinated care for patients with complex, chronic conditions. In the past two years, Shields has expanded its platform to include more than 1 million specialty patients, adding 70-plus health system partners across the country. Once the investment is complete, the companies said Shields would continue to operate as it does now, managed under its current executive leadership as a discrete brand and entity. The companies expect the transaction to close by late in the second quarter of WBA’s fiscal 2022. WBA will consolidate Shields’ financials, with the expectation that it will be modestly accretive in the first full year after completion.



Apparel & Footwear

ThredUp investing $70 million in new DC that will store up to 10 million items

ThredUp is scaling up to meet its rapid growth with plans to open its largest and most automated distribution center to date. The leading online resale platform for women’s and kids’ apparel, shoes and accessories is expanding operations in the Dallas-Fort Worth metroplex. It will open a nearly 600,000-sq.-ft. supply chain facility in Lancaster, Texas. ThredUp said it will invest $70 million in capital for the new center. The Lancaster center, the company’s first four-level facility, will store as many as 10 million items. This will more than double ThredUp’s total distribution capacity to 16.5 million items across its network. The company intends to use the new facility to further expand its operating platform amid growing demand for secondhand apparel and accessories. According to ThredUp’s 2021 Resale Report, 52.6 million Americans resold apparel in 2020, and 76% of people who have never resold clothing are open to trying it.

Iconix Brand Group Inks Deal with Genesco to Create Starter Footwear

Iconix Brand Group Inc. has signed a licensing agreement with Genesco Inc. to become the exclusive U.S. and Canadian footwear licensee for heritage athletic brand Starter. In a statement, the New York-based brand management company said the deal is for three years. Also, it includes a three-year renewal option that would extend the partnership with the Nashville, Tenn.-based company through Dec. 31, 2027. “Genesco is the perfect partner to help Iconix further grow and maximize the Starter brand,” Iconix Brand Group Inc. president and CEO Robert Galvin said in a statement. “Starter has been part of the sports and fashion landscape for almost five decades, and as we celebrate our 50th anniversary, entering the footwear market will allow us to capitalize on the growing consumer demand for heritage brands.” With the deal, Genesco will design and manufacture Starter footwear for men, women and kids. Pricing will range from $49 to $150. The new line of footwear will launch in spring ’22 in sports and shoe specialty stores. Iconix Brand Group acquired Starter from Nike Inc. in November 2007 for $60 million in cash.

A.k.a. Brands Slips in Wall Street Debut

The wave of IPOs hitting Wall Street is bringing some new — and acquisitive — names to the fore and into the rough and tumble. Witness the Jill Ramsey-led A.k.a. Brands, which staged its initial public offering on Wednesday, raising some $110 million by selling 10 million shares at $11 each, with a good deal of the funds earmarked for debt repayment. Shares of A.k.a. fell 4.2 percent to $10.54 once they started trading. That still left A.k.a. with a market capitalization of $1.3 billion and a turn in the spotlight, which can be especially glaring on Wall Street. Ramsey — a digital retail veteran whose background includes stints at Walmart, eBay and Macy’s and is chief executive officer of A.k.a. — is looking to buy brands that have proven they can connect with consumers and then help them grow with a little business savvy. Ramsey took the helm of the Summit Partners-backed company just after the pandemic started and hit the ground running despite all the consumer disruption. She changed the name of the firm to A.k.a. from Excelerate Brands. And the portfolio, which already included Princess Polly, Petal & Pup and Rebdolls, started to grow this year with the addition of streetwear company Culture Kings. (Prince Polly, Petal & Pup and Culture Kings are all based in Australia, while plus-size specialist Rebdolls is headquartered in New Jersey.)

Victoria’s Secret rival ThirdLove launches into activewear with new sports bra

Lingerie start-up ThirdLove is hoping to get an even bigger leg up on its biggest rival, Victoria’s Secret, by launching into activewear. ThirdLove announced Wednesday the debut of its workout line, including a range of sports bras that the company says it has been working on for more than two years. ThirdLove said “sports bra” has become the most-searched term on its website in recent months, and CEO and co-founder Heidi Zak saw an opportunity to get into a growing, but highly competitive, activewear market, taking on the likes of Nike, Under Armour and Athleta. Victoria’s Secret has also been investing more in the category, recently debuting a line of sports bras and leggings called On Point.  While ThirdLove is also launching a selection of leggings and women’s workout tops, the centerpiece of this new line are its sports bras. Prices range from $45 to $70. “We aim to be the best sports bras that there is. Not to be mediocre, but to be awesome,” Zak said. “And it’s a growing market, so there’s plenty of room for new competition to come in and take market share.”



Athletic & Sporting Goods

Hydrow Funding Reaches Nearly $200M

Kansas City Chiefs star Travis Kelce and activewear brand Fabletics are investing in at-home rowing machine maker Hydrow.  The company’s latest funding round brought in comedian Whitney Cummings and recording artists Justin Timberlake and Lizzo, adding to a list of investors that includes Kevin Hart, who was named creative director of the Hydrow last October. Hydrow launched a partnership with Fabletics the same month.  While specific financial terms were not disclosed, the new funding brings Hydrow’s total amount raised to nearly $200 million.  Founder and CEO Bruce Smith said sales rose 300% through June of this year compared to the same period in 2020.  The company is in talks to go public via a SPAC merger with Sandbridge X2 Corp., which would value the combined company at more than $1 billion.  Last year, Hydrow raised $25 million in a round that included private equity firm L Catterton and Rx3 Growth Partners, co-founded by Aaron Rodgers.

Weinberg Capital acquires maker of Drake duck-hunting apparel

Weinberg Capital Group, the Cleveland-based family office that invests in middle-market companies, has acquired a sporting apparel company in Mississippi for undisclosed terms.  Drake Waterfowl Systems in Olive Branch, Mississippi, makes and sells hunting, fishing and casual apparel for outdoor enthusiasts sold under the Drake brand name, Weinberg Capital said in a press release.  Founded in 2002, Drake was the first company to design technical apparel specifically for waterfowl hunting.  In addition to its waterfowl offerings, Drake makes branded apparel for deer hunting (Non-Typical), turkey hunting (Ol’ Tom) and fishing (Drake Performance Fishing), as well as casual apparel for men, women, and children.  Drake sells its products through a big-box and dealer retail network, which includes Cabela’s and Dick’s Sporting Goods, and on its website.

Cosmetics & Pharmacy

Puig taps into China’s swelling fragrance market with Scent Library investment

Family-owned fragrance and beauty owner Puig has made a strategic move with an investment in Chinese fragrance brand Scent Library. According to sources, the Series B round raised US$10m, however, the official investment total has not been disclosed. Also a retailer and distributor of niche fragrances in the Greater China area, Scent Library stocks fragrances from Demeter, Mor Cosmetics and Six Scents with nearly 80 destinations across the country. The Beijing-based company has been tapping into China’s burgeoning domestic fragrance market since 2009, with product lines offering perfumes, home fragrances and body care. A report by iResearch tipped that China’s fragrance market is to become the world’s second largest fragrance market with spending spiralling from $867m in 2017 to $1.7bn in 2020.

The Hut Group Beauty’s IPO Planned for 2022

The Hut Group’s beauty branch is to be separated from the group and launched on the London Stock Exchange in 2022. In a filing with the exchange, Matthew Moulding, executive chairman and chief executive officer of the British beauty, wellness and tech company, said of the upcoming beauty branch’s listing: “We believe we will create further value for our shareholders.” Also in the filing, THG wrote of the IPO plan: “This commitment reflects the continued strong organic growth of the division and its position as the industry’s digital strategic partner globally, its growing U.S. footprint, expanding global social media presence — [more than] 3 million Instagram followers — and vertically integrated model. A separate listing for THG Beauty will position the business very well to focus investment in its key growth areas, including own-brand portfolio expansion.” THG said the decision about whether its nutrition branch will be listed separately, and if so, when, remains under consideration. THG, which owns a host of retailers, brands and manufacturers, and builds and operates websites for third parties, went public last September on the LSE. At the time, it became the U.K.’s largest tech IPO and biggest marketing listing in the prior five years.


Discounters & Department Stores

Walmart simplifies shopping for eco-friendly and healthy products

Walmart has created an online shopping destination called Built for Better to help customers find brands and products aligned with their healthy food, clean living or sustainability goals, Jane Ewing, Walmart’s senior vice president of sustainability, wrote in a blog post on Tuesday. Icons on the website and app will help shoppers find products that have met independent standards like EWG Verified, Energy Star Certified or Rainforest Alliance Certified. “[W]e know shopping with purpose often takes extra time. It requires researching products and reading labels, all of which can be overwhelming for our busy customers,” Ewing wrote.

Reuse in focus at Nordstrom x Levi’s pop-up

With an emphasis on sustainability and reuse, Nordstrom and Levi’s are partnering on limited pop-up shops in nine Nordstrom stores and online, with exclusive collections from Collina Strada, Melody Ehsani and Thompson Street Studio, plus Levi’s Authorized Vintage and Red labels. Collina Strada used “garments already in circulation” in her designs, and Thompson Street Studio’s Kiva Motnyk used denim scraps to create clothing and home goods, for example. Items from the Authorized Vintage collection are “reworked pieces from the past,” per a Nordstrom blog post.

Is Bloomie’s the future of department stores?

The next generation of department store concepts may be located in Fairfax, Virginia. Armed with a smaller footprint (22,000 square feet), a stylish selection of products and a tech-savvy space, Bloomingdale’s new Northern Virginia location, Bloomie’s, could point to a new direction for the sector. Or, at the very least, an alternative path. “Our new Bloomie’s store will deliver everything they love about Bloomingdale’s in a highly edited, convenient, and unexpected way,” Bloomingdale’s CEO Tony Spring said of the concept earlier this year.


Target announces plans to hire 100K seasonal workers

In preparation for a hectic holiday shopping season, Target announced it wants to hire 100,000 seasonal workers, down from the 130,000 workers it planned to hire in 2020 and 2019. The retailer also said it is giving team members more hours and the option to work sporadically, which means taking occasional shifts that fit their schedules, according to a press release Thursday. Target is also offering existing store workers an additional 5 million hours — that’s equivalent to over $75 million in wages. Target has a $15 minimum wage for all team members, per the release. Seasonal workers also have the option to continue working for Target after the holidays.



Emerging Consumer Companies

Tia, care platform for women, raises $100 million

Tia, a four-year-old platform that combines in-person and virtual care for women, announced a $100 million Series B on Tuesday. The investment in the New York-based company was led by Lone Pine Capital. Existing investors including Threshold, Define Ventures and Torch Capital. The round values Tia at $600 million and brings the total raised to date to raised $132 million. Tia works on a membership model, where members pay around $150 a year to access the company’s clinics, the first of which opened in New York City in 2019.

Fittr, fitness platform, raises $11.5 million

Fitness and nutrition platform Fittr raised $11.5 million in a Series A round. The investment was led by Dream Capital and Elysian Park Ventures, the Los Angeles Dodgers ownership group’s private investment firm. Previous investor Surge, Sequoia Capital India’s accelerator program, also participated in the round. Fittr will use the funding to strengthen its leadership and expand in the U.K., Singapore, and North America, which account for 30% of the company’s revenue. The India-based platform wants to continue focusing on educating its home country about health and fitness. Profitable since its inception, Fittr surpassed 65,000 paid users this year, recording around 20% month-over-month growth on its personal training service.

Dogdrop, dog care startup, raises $2.9 million

Dogdrop, a Los Angeles-based dog care startup, announced a $2.9 million round led by Fuel Capital with participation from Muse Capital, Animal Capital, Gaingels, The Helm and leaders in pet care including Mars PetCare and Garrett Smallwood, CEO of Wag! Dogdrop is also announcing the launch of their new franchise operations to meet the dramatic rise in demand for dog care services. The company’s mission is to provide the best possible care, products, and services to dogs everywhere, so they live longer, happier and healthier lives. It provides better, more accessible dog care with their physical locations for recreation and activity, and direct-to-consumer at-home essentials for dog parents.



Grocery & Restaurants

Bregal Partners takes stake in frozen pizza maker

Private equity firm Bregal Partners has invested in Oggi Foods Inc., a Montreal-based manufacturer of gluten-free, organic, non-GMO frozen pizza and other food products sold in grocery stores and restaurants across North America. Financial terms of the investment were not disclosed. Founded in 2015, Oggi utilizes proprietary gluten-free recipes and a hand-stretching crust production process that give the company’s signature Neapolitan-style pizzas a doughy, naturally rising crust. In addition to traditional gluten-free pizzas, Oggi offers several 100% vegan and plant-based-meat frozen pizza formats. The company also offers Dolce Vita baking mixes. “We were highly impressed with the quality of Oggi’s products and with the company’s growth over the last several years, and we are thrilled to have this opportunity to partner with Oggi’s founders and management during this next exciting phase of the company’s growth,” said Charles Yoon, managing partner of Bregal Partners.

Investment firm acquires Odwalla from Coca-Cola

Investment firm Full Sail IP Partners has acquired the Odwalla brand from the Coca-Cola Co. Financial terms of the transaction were not disclosed. A maker of bottled smoothies and juice blends, Odwalla was launched in 1980 and acquired by Coca-Cola in 2001 for $181 million. Atlanta-based Coca-Cola Co. discontinued the Odwalla brand in August 2020, citing “a rapidly shifting marketplace.” At that time, Coca-Cola said the decision to discontinue Odwalla was made despite “every effort to support continued production and delivery services” and comes at a time when “it is more important than ever to evaluate where we can improve efficiencies in our business and operations.” Backed by Warburg Pincus, a global growth investor, Full Sail’s mission is to acquire brands and create new opportunities for growth and expanded relevance through a transformational brand licensing business model.

Sovos Brands prices IPO

About six years ago Todd Lachman began recognizing that retail sales of smaller, on-trend brands were growing at the expense of larger brands. With the backing of private equity investor Advent International, Sovos Brands was founded in 2017. After acquiring the brands Michael Angelo’s, Rao’s, noosa and Birch Benders, the Louisville-based company is taking another big step in its history. Sovos Brands on Sept. 22 priced its initial public offering of 23,334,000 shares of its common stock at $12 per share. The shares began trading on the Nasdaq Global Select Market on Sept. 23 under the ticker symbol “SOVO.” From 2019-20, net sales for Sovos Brands increased 66% to reach $560 million while adjusted net income rose to $44 million from $11 million. In Latin, sovos translates to “one of a kind,” a trait Sovos Brands looks for in acquiring premium brands that have yet to reach their market penetration potential. All the brands that Sovos has acquired had under 10% household penetration at the time, Mr. Lachman said. “We averaged about one acquisition a year over the last four years, and we have the full intention to execute that element of our playbook going forward,” Mr. Lachman said.

Home & Road

Re-sale of home furnishings on the rise, says Chairish report

Online vintage and antique home furnishings marketplace Chairish unveiled the findings of its Home Furnishings Resale Report. The survey used to collect the report data was conducted in partnership with Statista, which uses consumer surveys, official data, data sharing and secondary sources to analyze, model and forecast metrics including market share and size. Statista conducted a survey of 3,485 Americans on re-commerce and the furniture and home goods retail market. Sixty-six percent of U.S. homes now have resale home goods and furniture, according to the report. More than 550,133 vintage, antique and pre-owned items have been “re-homed” by Chairish since the company’s founding in 2013. Chairish also saw a 60% increase in sales last year. Officials said the growth reflects the accelerating popularity of resale home furnishings, due to factors including the increased awareness of the environmental benefits of buying pre-owned items for the home, a renewed interest in home decor and improvements that resulted in spending more time at home and supply chain issues in the broader home segment, which slowed the manufacturing and delivery of new goods.

Bed Bath & Beyond partners with Doordash to get goods to customers

For the first time, consumers can get their home goods delivered along with their dinner. Bed Bath & Beyond has teamed up with Doordash, the food delivery company, to deliver home products to customers’ doors within an hour. DoorDash will offer more than 60,000 products and items found on and its sister company website,, as well as on the DoorDash marketplace app and website. The partnership makes Bed Bath the first home retailer to have goods delivered on demand by a company that typically specializes in deliveries of things like tacos, cookies and acai bowls. For Bed Bath & Beyond, it’s an opportunity to continue its omni-first initiatives, said Rafeh Masood, EVP, chief digital officer and interim chief brand officer. “We are particularly pleased to be the first retailer specializing in home and baby to join the DoorDash marketplace, as it speaks to our authority in these markets and our work to strengthen our customer base,” he said.

Jewelry & Luxury

Brilliant Earth halves number of shares, lowers price in IPO

Sustainable jeweler Brilliant Earth, which runs a few showrooms but largely sells online, on Thursday debuted on Nasdaq’s Global Select Market stock exchange, offering 8.3 million shares priced at $12 each and trading under the ticker “BRLT.” That’s significantly below the 16.7 million shares, priced between $14 to $16, the retailer previously said it expected to offer. “Obviously we can’t control market conditions,” CEO and co-founder Beth Gerstein said by phone before the opening bell. “We’re holding on to our shares because we think there’s so much tremendous long-term value.” Topline growth is outpacing rival Signet, though in the last two years, web traffic for Signet brands Zales and Kay topped Brilliant Earth during the holiday season, per Similarweb research.


Kering – Owner of Balenciaga, Bottega Veneta and More – Is Going Fur-Free

By Fall 2022, Kering — the luxury parent company behind brands like Balenciaga, Bottega Veneta, Alexander McQueen, Brioni, and Saint Laurent — will officially phase out the use of fur across all of its brands, according to an official announcement on Friday, Sept. 24. This news comes just five years after the mega-brand Gucci stopped using the controversial material, promising consumers to integrate more ethical and sustainable practices going forward. Historically, fur has been seen through a luxurious lens, symbolizing power and wealth. But it’s clear that this perception has changed over the decades, with brands seeing a huge decrease in demand due to the unethical impact it has on the planet and animals.

Why Luxury Brands Are Sitting Out the Resale Market Boom

As the resale market soars, the majority of luxury brands remain on the sidelines of fashion’s fastest-growing segment. The secondhand market is forecast to double in the next five years to reach $77 billion by 2025, according to resale marketplace ThredUp. Within that total, resale is expected to grow 11 times faster than the broader retail clothing sector to reach $47 billion, the company said in its “2021 Resale Report.” A flurry of M&A deals, including Etsy’s acquisition of Depop for $1.6 billion, suggests there are rich rewards to be reaped in the sector. But many luxury brands are reluctant to take ownership of the process, fearing that resale could cannibalize sales of their full-price products and dent their image of exclusivity. Others are put off by the complexity of implementing circular models, and doubt the financial viability of such efforts.

Vortic Watch Co. Looks Ahead After Victory In Swatch Group Trademark Lawsuit

A New York District Court this month gave Vortic Watch Co. its latest legal win against a division of the Swatch Group. The lawsuit, which Vortic’s cofounders have been fighting since 2015, challenged the Fort Collins, Colorado–based startup’s efforts to sell upcycled Hamilton-trademarked pocket watches as wristwatches. Cofounder R.T. Custer is celebrating the victory, but not for long, he says. He has bigger projects in mind: paying back the six figures in legal fees the court case racked up, as well as hiring more people at Vortic to create the watches collectors are snapping up as soon as they go on sale. To the point: On Tuesday, Vortic put one of its Hamilton upcycled wristwatches on its website for sale for the first time since the lawsuit was filed. The Lancaster 103 sold out on the first day it was available, at a cost of $2,495. It was a bittersweet moment for Custer and his eight-person company.


Office & Leisure

Mirror CEO steps down after last year’s acquisition by Lululemon

As Lululemon comes under pressure to share more information about Mirror’s performance, founder Brynn Putnam is stepping down from the CEO role at the home fitness platform, according to a memo to employees. The memo noted that Putnam would stay on at Lululemon as an adviser to Mirror until July 2022, “to ensure a smooth transition as we identify the next CEO.” The search for a new CEO is now underway. Since Lululemon’s $500 million Mirror acquisition in June last year, the fitness platform has sparked intrigue and some frustration as analysts try to understand the impact it will have on Lululemon’s core business. “While the 2020 Mirror acquisition was initially received positively by the market, it appears sentiment has cooled over time as management has intentionally limited disclosure around the business’ performance,” Morgan Stanley analysts led by Kimberly Greenberger said in emailed comments after Lululemon’s latest earnings report.  Mirror is now in 150 Lululemon stores, with that number expected to grow to 200 by the holidays. An expansion into Canada is also close on the horizon, and Lululemon has opened a second production studio for Mirror, which doubles the number of classes the platform can offer. At the beginning of this year, the athletics retailer said Mirror brought in $170 million, and CEO Calvin McDonald said at the time that number was expected to grow by 50% to 65% this year.

Gambling on U.S. sports betting growth

Gambling has always been about the flypaper. Use glitz to get customers in the door, free drinks to get them in the seats and then loyalty perks to get them to tables with higher minimums. A version of the flypaper effect is now happening with the gambling industry itself, which is experiencing a major consolidation wave. Online content drives people to online sports betting, which then drives them to interactive online gaming, which is higher margin and often partners with physical casinos for co-branding or white-label opportunities. And within all of that is online ad tracking, which lets operators retarget and significantly increase conversion rates. CNBC has reported that DraftKings had offered to buy Entain, the listed British sports betting firm that owns Ladbrokes and Coral, for $20 billion. Entain later confirmed it had received a takeover offer from DraftKings, but didn’t provide additional details. A source familiar with the situation says that DraftKings made its offer more than two months ago for just under that $20 billion mark, and that there have not been counterbids. This would be DraftKings’ largest acquisition to date, but it’s been active. Just this year it bought the Golden Nugget Online Casino for $1.5 billion in stock, sports betting video content company VSiN for what Axios hears is around $100 million and reportedly is among the suitors for a $3 billion brand licensing deal with ESPN.

Guitar Center files confidentially for IPO: Debtwire

Guitar Center management has filed confidential registration papers for an initial public offering with the Securities and Exchange Commission, according to a report from Debtwire that cited anonymous sources. The filing follows increases in the retailer’s sales as well as earnings, which have trended up both from last year and 2019 in the company’s latest quarter, according to Debtwire data. The S-1 filing also comes less than a year after Guitar Center filed for bankruptcy under the weight of its debt load and pandemic disruption. The musical instrument retailer made a relatively quick trip through bankruptcy last year in a process that allowed it to shed hundreds of millions of dollars in debt while also raising new capital. At the time, Guitar Center CEO Ron Japinga noted the “challenging times created by the pandemic” that led to its filing. But the company had been hobbled by debt for years after multiple private equity takeovers. On exiting bankruptcy in December, Japinga said that the process had given Guitar Center “the financial and operational flexibility we need to reinvest in our business and support our long-term sustainable growth.”

Technology & Internet

Elon Musk says the chip shortage is a ‘short-term’ problem

Tesla CEO Elon Musk said Friday that the ongoing semiconductor crisis will be over by next year. The tech billionaire said he thinks chip shortage is a “short-term” problem as opposed to a long-term one. “There’s a lot of chip fabrication plants that are being built and I think we will have good capacity by next year,” Musk said at an Italian tech event that was streamed online Friday. The global chip shortage has had a major impact on a wide range of industries, but the automotive sector has been particularly badly hit. Big names in the industry such as Ford, Volkswagen and Daimler have all been forced to suspend production at various points and cut their manufacturing targets as a result of a lack of chips.


Toast built a $30 billion business by defying Silicon Valley VCs

Not long after selling software company Endeca to Oracle in 2011 for over $1 billion, Steve Papa called Bessemer Venture Partners with a hot tip. He said three of his best engineers were working on something new that Bessemer, which had previously backed Endeca, would be crazy not to fund. Kent Bennett, who’d been a junior associate on the Endeca deal, fielded the call. He told Papa there was some empty space at the firm’s office in Boston that his people could use. But Bennett knew he couldn’t get his firm, one of the biggest and most successful in the venture industry, to write a check to three engineers with an unspecified project. “I said, ‘Well just send them over here and they can hang out here until they figure it out,’” Bennett told CNBC, recalling his conversation with Papa. The three guys and some office space eventually became Toast, a provider of software and hardware to restaurants that held its New York Stock Exchange debut on Wednesday, closing the day with a market cap of over $31 billion.


Finance & Economy

Household net worth rises above $141 trillion, but debt up sharply as well

American households saw another significant jump in net worth as well as hefty increases in debt and credit, the Federal Reserve reported.  Thanks in good part to a big jump in stock market earnings, total household net worth rose to $141.7 trillion through the second quarter of 2021, the central bank’s Financial Accounts of the United States report showed.  That was good for a $5.85 trillion increase, or 4.3% from the first quarter. Looking back to a year ago, when the nation was in the early days of the Covid-19 pandemic, the net worth total represents a 19.6% increase.  A large chunk of the new wealth came from stocks, which accounted for $3.5 trillion of the gain, while real estate appreciation was responsible for $1.2 trillion.

New jobless claims unexpectedly rise to 351K amid Delta variant concerns

The number of Americans newly seeking jobless benefits unexpectedly rose again last week amid ongoing concerns over the surge in COVID-19 cases driven by the Delta variant, the feds said.  Initial filings for unemployment benefits, seen as a proxy for layoffs, rose to 351,000 last week, up 16,000 from the prior week’s revised level of 335,000, according to data released by the Labor Department.  Economists surveyed by Dow Jones expected to see weekly new claims drop to 320,000.  Weekly new claims have fallen substantially from the 2020 peak of about 6.1 million new claims in a single week, but remain above pre-pandemic levels.

Upbeat Holiday Forecasts Arrive

According to a number of forecasts, holiday sales this year are expected to expand at least seven percent year-over-year. However, supply chain disruption, inflation and labor shortages continue to present challenges.  AlixPartners, the consulting firm, expects retail holiday sales in the U.S. to increase in the range of 10 percent to 13 percent over last year’s holiday season, which would make this the strongest holiday period since 1999.  The firm also released a survey, conducted this month, of more than 1,000 U.S. consumers, which reinforced its optimistic forecast, including its finding that 88 percent of consumers plan to spend the same, or more, this holiday season, with 12 percent planning to spend less. Notably, the recent rise of the Delta variant has not slowed consumer consumption this season, with just 12 percent of respondents saying it would decrease or likely decrease their holiday spending.