It was great to see so many of you at last week’s ninth annual Consensus Great Brands Show at The New York TimesCenter. Consensus and the show’s sponsors, without whose help we could not have pulled this off, hosted 18 presenting companies, 15 exhibitors and our keynote speaker Michelle Gass, CEO of Kohl’s. We hope all of you left as inspired and impressed as we were after learning about the great work and successes of all the participating companies.
A major theme running through many of the presentations was health – both global health, as illustrated by presenters whose companies give back to the global community, and personal health, as illustrated by companies that promote wellness and healthy lifestyles. We learned that apparel chain Altar’d States’s core mission is to do good by supporting community-focused and global charities. The family-run clothing brand Faherty produces clothing with artisanal and sustainable fabrics while developing close relationships with its manufacturers, many of which are family-owned. Tentree is an earth-first apparel brand that plants ten trees for every item sold, and proudly notes that there have been over 30 million trees planted to date, on its way to a goal of one billion trees by 2030. United by Blue makes products ranging from reusable straws and drinkware to eco-friendly clothing and bags, and for every product sold, removes one pound of trash from waterways and oceans, amounting to almost 2 million pounds of trash picked up since 2010.
Our healthy lifestyle presenters included three companies providing personal fitness options. Cubii makes innovative, easy-to-use seated elliptical equipment that lets people get fit while they sit. EverybodyFights offers fitness classes based on a real boxer’s training regimen. TB12 delivers personalized programs to athletes to prevent injury, improve longevity and raise peak performance.
Our food and beverage exhibitors and presenters provided delicious refreshments throughout the day, with nearly all championing better for you, earth-friendly themes. Van Leeuwen makes small batch ice cream and vegan ice cream from local, organic ingredients. Using words to describe their products including sustainable, organic, local, healthy, non-GMO, vegan, clean, natural, gluten-free, and lactose-free were the exhibitors Archer Roose (wine), Brooklyn Bites (snacks), Koia (nutrition beverages), LesserEvil (snacks), Little Dish (toddler meals), Loverboy (sparkling hard tea), Mighty Swell (hard seltzer), MySuperFoods (kids’ snacks), Real Good Fish (seafood), RIND (fruit snacks), Rogue (beer and spirits), Slate (beverages), and Tiesta Tea (tea beverages).
This week, we’ll be meeting to evaluate the successes and opportunities resulting from our ninth event, and we welcome your feedback. Of course, we’ve already started thinking about next year’s Consensus Great Brands Show, and we are happy to hear your suggestions for that as well.
Headlines of the Week
Fashion retailer Forever 21 filed for Chapter 11 bankruptcy protection Sunday, hobbled by expensive leases and declining mall traffic. The family-owned company said it would close “most” of its stores in Asia and Europe and up to 178 stores in the U.S.. The retailer said the exact number of closures would be contingent on negotiations with landlords, but “we … expect a significant number of these stores will remain open and operate as usual, and we do not expect to exit any major markets in the U.S.” With more than 800 locations overall, Forever 21 is one of the largest specialty apparel retailers in the country. The retailer’s aggressive expansion in recent years has led to problems. Much like other traditional retailers, the company is grappling with digital competition and changing shopping habits.
Michelle Gass, CEO of Kohl’s, spoke optimistically at the 9th annual Consensus Great Brands Show. She outlined her strategy for the future, which includes opening her doors to innovative ideas. That was appropriate since the Great Brands Show is all about emerging brands and introduced many dynamic up-and-coming companies. Gass also commented on Kohl’s partnership with Amazon. She was very pleased with the results, since 80% of the customers who were returning Amazon merchandise in Kohl’s stores shopped in the store after that initial transaction.
Apparel & Footwear
Struggling Ascena Retail Group Inc. is considering the sale of two more of its chains amid mounting losses and signs that creditors are losing confidence in the company’s prospects. Ascena has held discussions about divesting Catherines and Lane Bryant, which specialize in plus-size women’s apparel. Creditors concerned by Ascena’s deteriorating results have hired advisers to address flagging sales and approaching debt maturities. A lender group tapped advisory firm Greenhill & Co. to help evaluate potential options. A sale would mean a significant cut in Ascena’s empire, which now totals about 3,500 stores, and would reverse an acquisition spree that culminated with the 2015 purchase of Ann Taylor and its Loft chain. Lane Bryant operated 731 stores at the end of its third fiscal quarter, and Catherines had 332.
U.S. private equity firm Carlyle has hired Bank of America Merrill Lynch to look at a possible sale of Italian high-end shoe company Golden Goose Deluxe Brand, two sources close to the matter said on Friday. Carlyle bought the company, known for its $500 sneakers with a five-point star on the side, from Ergon Capital Partners in 2017. At the time, the equity value was of the business was 400 million euros ($440 million). Golden Goose also sells bags, leather jackets and casual clothing for both men and women. News of the possible sale was first reported by Italy’s Il Sole 24 Ore newspaper.
Lululemon is planning to wind down its Ivivva kids business, which includes shuttering a handful of remaining stores, as part of a bid to grow men’s and international sales. “We’ve made the decision to close what remains of the ivivva business in order to unlock capacity to support our long-term growth,” Celeste Burgoyne, executive vice president of Americas and global guest innovation for Lululemon, said in a statement. “We have forged strong relationships with an engaged community of active girls and we look forward to connecting with them through the lululemon brand.” The company said its seven remaining standalone Ivivva stores — three in Canada and four in the U.S., one being at the Mall of America — will close by the middle of next year.
Fashion rental service Rent the Runway is refunding and giving out extra cash to disgruntled customers even as it warned that the service disruptions that have plagued the startup for weeks are likely to continue. “We know we have broken complete customer trust by not delivering their orders on time,” Chief Executive Officer Jennifer Hyman said in a phone interview Thursday evening. She said Rent the Runway will issue refunds as well as give an additional $200 in cash to customers who have had their orders canceled due to the supply chain problems. “To repair that trust, we didn’t feel it was right to offer credit to Rent the Runway,” she said. Complaints about outfits that didn’t show up on time or never arrived have plagued the clothing subscription service over the past few weeks. The start up, which is valued at over $1 billion and backed by investors like Franklin Templeton, has blamed the installation of a new warehouse software system for the issues.
Athletic & Sporting Goods
New Balance has been Liverpool’s kit sponsor since 2015, but that had been set to end next season. Nike had agreed a deal worth £70 million (approximately $86 million USD) for the club’s kits, which was £25 million (approximately $31 million USD) more than New Balance’s older deal. However, The Athletic has revealed New Balance argues that it has triggered a clause to match Nike’s offer and keep the deal beyond May 2020. Liverpool is insisting that this isn’t the case, which has led to New Balance filing a dispute at the high court.
Wahoo Fitness, a company best known in cycling for its indoor smart trainers and GPS bike computers, has announced its acquisition of Speedplay pedals for an undisclosed amount. The acquisition is the second from Wahoo in as many months, with the American company recently acquiring the Sufferfest online training platform. Speedplay, best known for its lollipop-shaped dual-sided road pedals, is an American company with a long history in producing a range of performance clipless pedals with unique features.
Cosmetics & Pharmacy
Rite Aid reported a second fiscal quarter net loss of $78.7 million, or $1.48 per share, and adjusted net income of $6.3 million, or 12 cents per share. “After my first few weeks as CEO, I’m optimistic about our future because I believe in the Rite Aid brand and the opportunity we have to deliver innovative experiences as a health-and-wellness destination, even as we recognize the challenges ahead,” Rite Aid CEO Heyward Donigan said. Revenues from continuing operations for the quarter were $5.37 billion compared with revenues from continuing operations of $5.42 billion from the year prior.
Fans of Honest Beauty products can soon head to their nearest Walgreens to pick up whatever essentials they need. The brand, which counts actress Jessica Alba as one of its founders, announced that its products will hit 750 Walgreens stores across the nation and its website. Honest Beauty products are cruelty-free, formulated in-house, and made with quality ingredients that have been vetted by the company’s team of R&D experts who formulate and test in its in-house laboratories, the company said. This launch also builds upon the brand’s previous launch of the Honest Baby line at Walgreens back in March 2019, the company said.
Birchbox — which has toyed with retail concepts over its nine-year trajectory — may have found one that sticks. Katia Beauchamp, Birchbox cofounder and chief executive officer, said that the company is planning to expand further with Walgreens in November. “We are launching 500 stores with small expressions in November of this year,” Beauchamp told the crowd at the WWD Digital Forum. So far, Birchbox has been opening up shop-in-shops with Walgreens, which have been “meaningfully changing beauty sales” in the Walgreens doors they are in, Beauchamp said. Birchbox also just gave employees in 3,000 Walgreens stores the ability to subscribe people to Birchbox, Beauchamp said.
Discounters & Department Stores
On September 24th, Marshalls debuted its e-commerce site, Marshalls.com, allowing users to shop the off-price retailer’s “ever-changing” inventory online, according to a company press release. The site will feature an assortment of men’s, women’s and children’s apparel, as well as shoes, home goods and beauty products, most of which can be returned either by mail or at one of Marshalls’ 1,100 locations nationwide, the company said. Shoppers can use various interactive functions, including the site’s “swipe to shop” feature, which allows users to save items for later; “curated shops,” which is filled with trendy items; and “influencer + shopper finds,” which curates product inspiration from influencers and consumers, according to the company’s announcement.
Walmart has received inquiries from firms interested in JetBlack, which could entail the company spinning off the text-to-order business, partnering up with outside parties or selling JetBlack entirely, Bloomberg reported on Thursday, citing people familiar with the situation. A representative from Walmart declined CNBC’s request for comment. Walmart launched JetBlack about two years ago, initially in beta testing. The platform, which is still only live in New York, has been spearheaded by Rent the Runway co-founder Jenny Fleiss. Fleiss joined Walmart in 2017 to work alongside Jet.com founder Mark Lore.
Walmart is adding seven health-related bachelor’s degrees and two career diplomas to its college perks program, where employees pay just $1 a day for an education, the company announced Tuesday. The nation’s largest private employer said its 1.5 million U.S. workers will now be able to pursue career diplomas for pharmacy technicians and opticians, through the Penn Foster online college. Also, seven bachelor’s degrees in health science, health and wellness and health-care management/administration will be offered through Purdue University Global, Southern New Hampshire University, Bellevue University and Wilmington University. Walmart said it hopes this initiative will help fill a growing need for health-related jobs within its own business. It currently has 5,000 retail pharmacies, 3,000 vision centers and 400 hearing centers across the U.S., including through Sam’s Club.
Emerging Consumer Companies
CircleUp, the CPG-focused outfit with equity, credit, and data groups, announced that its credit division had secured more than $200 million in additional financing to back growing consumer brands, with the money coming from investors that include Michigan’s state pension fund and Pacific Life. It’s a significant boost to CircleUp’s loans business, which has originated more than $300 million in loans since its 2017 launch.
Primary, the rising children’s apparel brand, announced a $20M Series C investment led by USVP and Homebrew Ventures. The company makes gender-neutral, essential children’s clothes from premium cotton fabrics and at an affordable price point – most under $25. Primary will reportedly generate $50 million in revenue in 2019.
Foot Locker announced a strategic investment in NTWRK, a leading youth culture e-commerce and content platform. The $3 million investment will enable Foot Locker and NTWRK to bring together great brands to utilizing NTWRK’s episodic format to release exclusive products, original content and access to high-profile names in youth culture.
Grocery & Restaurants
Anheuser-Busch InBev has priced the revived initial public offering of its Asia-Pacific business at the lower end of the projected range, raising $5bn from the sale of shares in the division — far less than it had hoped to raise when it tried to list the unit in July. The world’s largest brewer initially sought to raise closer to $10bn from listing on the Hong Kong stock exchange, but shelved its IPO plans two months ago after investors were put off by the price. AB InBev last week set an indicative price range of HK$27-HK$30 per share, and said on Tuesday that it had priced the stock at the bottom end of that range. Though shy of the size initially sought, the share sale is still the world’s second-biggest this year, after Uber raised $8.1bn in May.
sweetgreen announced the closing of a $150 million financing round, co-led by Lone Pine Capital and D1 Capital Partners with participation from existing investors, valuing the company at $1.6 billion. The capital enables sweetgreen to make strategic investments in technology, data, supply chain, and social impact. Since launching in 2007, sweetgreen has been disrupting the $800 billion US restaurant industry by rethinking the customer experience and challenging traditional ways of what it means to be a fast food company.
The growing Kitchen United network of virtual kitchen facilities has closed on a $40 million Series B funding round that will bring the concept into the nation’s No. 1 restaurant delivery market: New York City. Pasadena, Calif.-based Kitchen United said Wednesday the round was led by New York real estate company RXR Realty, along with GV, formerly known as Google Ventures, which led a $10 million Series A funding round last year. Also participating in the latest round were funds managed by Fidelity Investments Canada ULC, DivcoWest and G Squared, as well as existing investors and co-founders John Miller and Harry Tsao of the tech-focused Cali Group. Launched in 2017, Kitchen United operates delivery-focused commercial kitchens. By the end of the year, the company expects to have eight Kitchen United locations open.
Private equity firm L Catterton has completed the acquisition of Del Frisco’s Restaurant Group Inc. for approximately $650 million or $8 per share, as first announced in June. As part of the transaction, L Catterton will be selling two of the restaurant group’s brands — Del Frisco’s Double Eagle Steakhouse and Del Frisco’s Grille — to hospitality company, Landry’s, Inc. for an undisclosed amount, and the Del Frisco’s company will be taken private. The remaining Del Frisco’s Restaurant Group brands — Bartaco and Barcelona Wine Bar — will operate as separate entities with different leadership teams and business strategies under the L Catterton portfolio.
Multi-concept owner Inspire Brands announced that it has entered into an agreement to acquire Jimmy John’s Sandwiches. The financial terms of the transaction were not disclosed. Atlanta-based Inspire owns the Arby’s, Buffalo Wild Wings, Sonic Drive-In and Rusty Taco brands which total about 8,300 locations worldwide. Jimmy John’s has more than 2,800 locations across 43 states. Inspire, which is owned by Roark, was created in 2018 after Arby’s Restaurant Group Inc. completed a $2.9 billion acquisition of Buffalo Wild Wings Inc. and renamed itself.
Home & Road
Ikea’s worldwide sales increased 6.4% in the past fiscal year, fueled by big gains in its e-commerce business. Total sales of product and services at all 433 stores and online totaled 41.3 billion euros for the fiscal year ended Aug. 31, (the equivalent of $45.4 billion,) up from 38.8 billion euros the previous year. E-commerce sales grew 43%, the company said. Some 2.8 billion people visited its websites over the course of the year, and Ikea introduced e-commerce to nine new markets. Online sales are now available in 50 markets or most markets where the home furnishings giant operates. The company does not release profit figures.
Pier 1 Imports’ fiscal second quarter sales sunk 14.3%, and the struggling retailer said aggressive clearance action was the main reason for a $100.6 million net loss and an earnings per share loss that widely missed analyst estimates. Net sales for the quarter ended Aug. 31 decreased to $304.6 million from $355.3 million for the same period a year ago. Comparable sales were off 12.6% on lower average customer spend, primarily due to changes in the retailer’s mix and less store traffic, it said. The Top 100 company’s $100.6 million net loss for quarter, or a loss of $24.29 on a per-share basis, compared with a loss of $51.1 million, or $12.68 per share, and included business transformation costs of about $7 million, primarily related to professional fees, and a $4.3 million non-cash charge related to store impairment. The per-share figures were adjusted to reflect the company’s a 1-for-20 reverse stock split in June.
China wood furniture shipments to the U.S. fell nearly 17% in the first half according to an analysis by investment banking firm Mann, Armistead & Epperson Ltd. The analysis is revealing in that it gauges the impact China tariffs have had on the furniture business this year. According to the report published in the September 2019 Furnishings Digest Newsletter, Chinese wood furniture shipments in the first half of this year totaled $2.16 billion, compared with $2.6 billion in the first half of 2018, a 16.8% drop. The drop in the first quarter was 19.4%, followed by a 15% drop in the second quarter, the analysis showed.
By comparison, all household furniture shipments from China fell about 16.3% during the first half, to $7.8 billion from $9.4 billion during the same period of 2018 according to the report.
Jewelry & Luxury
WD Lab-Grown Diamonds has hired Sue Rechner, a veteran outdoor and footwear executive who has worked at Frederick Goldman and various watch brands, as its new chief executive officer. She takes over the Laurel, Md.–based diamond producer from founder Clive Hill, who will continue to serve as an active board member and shareholder.
After more than three decades of being a “One Child Nation,” China is now a Singles Nation. By the end of 2017, the number of single adults in China had surpassed 222 million, accounting for 15% of the total population. Among this vast single pool, whose sheer size exceeds the population of Russia and the UK combined, many are cash-rich urban dwellers who are increasingly open to spending more on fun.
In the past, brand collaborations with an established company were a favored tool of start-up companies looking to fuel growth and gain access to a ready-made customer base. But we have recently seen an increase in long-established luxury brands, with sizable customer bases of their own, collaborating to reach new target markets and provide their loyal customers with something new, exciting and different.
On September 27, 2019 Richemont announced that it had acquired 100 percent of renowned Italian jewelry house Buccellati Holding Italia SpA in a private transaction with Gangtai Group Corporation Limited, a privately held conglomerate. Gangtai was the previous owner of the Italian jewelry brand with an 85-percent stake in the company’s shares acquired in 2016.
Office & Leisure
MGM Resorts International, the largest casino operator on the Las Vegas Strip, is in talks to sell its Circus Circus property there to real estate mogul Phil Ruffin, according to people familiar with the deal. An accord to sell the resort could be announced as part of a larger transaction involving the company’s real estate portfolio, which also includes the Bellagio and the flagship MGM Grand. MGM has been restructuring under pressure from activist investors. The company has cut and reorganized management, and previously sold all but four of its wholly owned casinos to MGM Growth Properties Inc., a real estate investment trust it created three years ago. The company is in talks to sell two Las Vegas crown jewels, Bellagio and the MGM Grand, to Blackstone Group, Bloomberg News reported. Chief Executive Officer Jim Murren has said he hopes to announce the results of a board-level study of the company’s real estate by early fall.
This is not a Barbie doll. This is the new Creatable World doll. Going beyond the traditional Barbie tagline of “You can be anything,” the Creatable World doll is a high-fashion doll that is “designed to keep labels out and invite everyone in.” With the release of Mattel’s new gender-neutral dolls on Wednesday, the concept of high-fashion dolls is changing alongside the diverse array of kids that play with them. The dolls aren’t assigned to any particular gender, and without its formerly feminine label, the new Creatable World dolls cater to children who adopt various pronouns and those who identify as transgender, gender-fluid or nonbinary. These new dolls are designed to look like a 7-year-old with polished, makeup-free faces. As far as accessories, there is the optional wig and a gender-neutral wardrobe of hoodies, camo pants and tutus.
Bounce, the San Francisco-based startup built around a platform that providers short-term luggage storage solutions, has launched in Seattle. Catering to anyone who doesn’t feel like lugging their stuff around town, whether they’re travelers or residents, Bounce partners with local businesses who provide unused space as temporary storage space. Online or via the app (iOS, Android), users can pick a location, reserve, drop off items and go — for as little as $5.90 per item. Restaurants, hotels, retail stores and more can serve as locations in key areas of the city, allowing travelers especially to make the most of a long layover without the burden of carrying bags. In Seattle, there are 11 such drop-off spots so far. Bounce is in at least 18 U.S. cities, with plans for expansion to many more.
Technology & Internet
Best Buy is targeting $50 billion in revenue by fiscal 2025, the company announced Wednesday morning ahead of a meeting with investors in New York. The company also said in a press release it plans to cut an additional $1 billion in costs over the next five years, while operating income over that time frame grows at a 5% rate. CEO Corie Barry said in an interview with CNBC’s Courtney Reagan ahead of the investor meeting that Best Buy plans to “double down” on its growth strategy, despite “disruption” in the industry. The company has been investing in its supply chain to speed up delivery ahead of the holiday season, in addition to a slew of recent investments in health care, which it hopes will set it apart from other competitors in the electronics space. Best Buy has also been focused on growing partnerships with tech behemoths, including Amazon.
EBay announced Wednesday that Devin Wenig is stepping down as president and CEO and the company is moving forward with the potential sale of assets. “Devin has been a tireless advocate for driving improvement in the business, particularly in leading the Company forward after the PayPal spinoff,” Chairman Thomas Tierney said in a statement. “Notwithstanding this progress, given a number of considerations, both Devin and the Board believe that a new CEO is best for the Company at this time.” Scott Schenkel, eBay’s senior vice president and chief financial officer since 2015, has been appointed as interim CEO. Ebay said its strategic review of its asset portfolio, including StubHub and eBay Classifieds Group, is moving forward.
Amazon announced more than a dozen new Alexa-enabled products at its annual hardware event in Seattle on Wednesday. There was no clear unifying theme behind the hardware devices announced, which range from new Echo assistants to wireless voice-activated earbuds to an Alexa-enabled oven (for the second year in a row). But by throwing many ideas into the market and seeing what sticks, Amazon hopes to spread key homegrown technologies.
Finance & Economy
U.S. business investment contracted more sharply than previously estimated in the second quarter and corporate profit growth was tepid, casting a shadow on the economy, which is being stalked by financial market fears of a recession. Business investment declined at a 1.0% annualized rate last quarter, the government said in its third reading of second-quarter GDP. That was the steepest decline since the fourth quarter of 2015. Business investment was previously estimated to have declined at a 0.6% pace.
U.S. consumer spending barely rose in August, suggesting that the economy’s main growth engine was slowing after accelerating sharply in the second quarter. Consumer spending, fueled by the lowest unemployment rate in almost half a century, has been blunting some of the hit on the economy from the White House’s nearly 15-month trade war in China, which has sunk business investment and manufacturing.