Story of the Week
Kirkland’s, Inc., a specialty retailer focused on on-trend and seasonally relevant home decor at a great price, and Beyond, Inc., owner of Bed Bath & Beyond, Overstock, and Zulily, announced that they have entered into a strategic partnership. Kirkland’s will become Beyond’s exclusive brick-and-mortar operator and licensee for new, smaller format (up to 15k square feet) ‘neighborhood’ Bed Bath & Beyond locations nationwide. Additionally, Kirkland’s will participate in Beyond’s consumer data collective, global loyalty program, and financial services, and Beyond will support Kirkland’s digital transformation to drive improvements in e-commerce. According to the terms of the deal, Kirkland’s has entered into a $17 million Term Loan Credit Agreement with Beyond, $8.5 million of which consists of a convertible note that will convert into Kirkland’s common stock at a price of $1.85 per share upon the approval of Kirkland’s shareholders. Prior to receiving shareholder approval, Beyond may elect to convert a portion of the convertible note into up to 2,609,215 shares at the Conversion Price. In addition, the parties entered into a subscription agreement pursuant to which Beyond will purchase an additional $8 million of Kirkland’s common stock at the Conversion Price upon the approval of Kirkland’s shareholders, a seven-year collaboration agreement, and a trademark license agreement.
Apparel & Footwear
Struggling Boohoo Group Mulls Sale of Brands as CEO John Lyttle Exits
Boohoo Group is waving goodbye to its chief executive officer John Lyttle and could sell a number of the high-profile brands it acquired over the past few years to shore up its plummeting share price. On October 18th, the online fast fashion retailer said that in an effort to “maximize” shareholder value it was placing its three main divisions — Debenhams, Karen Millen and Young Fashion Brands, which comprises Boohoo and other youth-focused brands — under review. Some of those businesses were bought out of administration at a time when interest rates were low, and online sales were riding high. But macroeconomic dynamics have changed since the end of the pandemic, and businesses that once looked like a bargain now require more resources to run.
Pajar Canada Snaps Up Cougar Shoes
Pajar Canada revealed it has acquired Cougar Shoes. While terms of the deal remain undisclosed, Pajar called the deal a “significant milestone” in the evolution of both brands with the promise of enhanced product offerings. It seems unlikely that the Cougar team will stay intact. “At this time Pajar will be assuming responsibility for all Cougar operations, while Canadian sales have been delegated to the capable team at Trend Marketing,” a Pajar representative told FN. Based in Montreal, Pajar Canada is a fifth-generation family shoe business founded in 1963.
Adidas momentum continues with 7% sales growth
Continuing a recent winning streak, Adidas on Oct 15 announced preliminary third-quarter results, with revenue up 7% in the period to 6.4 billion euros ($7 billion at press time). Operating profit increased 46% to 598 million euros, including 50 million euros from the sale of the remaining Yeezy inventory. Even without the impact of Yeezy, the sportswear giant performed well. Excluding Yeezy sales from both this year and last, currency-neutral revenue grew 14% in Q3, according to a company press release. Gross margin also increased 2 percentage points in the quarter, reaching 51.3%, and the company said that the underlying Adidas gross margin “was even stronger.”
Athletic & Sporting Goods
U.S. Fitness Facility Memberships Reach Historic High
As more Americans prioritize their health and wellness, U.S. fitness facilities reported reaching a record 72.9 million members in 2023, representing 23.7 percent of the U.S. population ages six and older, according to new data from the Health & Fitness Association (HFA). HFA’s findings are detailed in its 2024 U.S. Health & Fitness Consumer Report that outlines trends in membership growth, participation and emerging opportunities for the health and fitness industry. The report details that the number of fitness facility members increased 5.8 percent year over year, marking the highest annual growth rate since 2017. Growth is also strong across all facility types, with fitness-only gyms, multipurpose centers, and boutique studios gaining market share. Additionally, the total number of facility and studio users, including members and non-members, rose by 9.7 percent year over year, reaching 90.7 million members.
TrueTimber Acquires Blizzard Buddy; Integrates Tech into Current Offerings
TrueTimber, which uses high-fidelity digital photography to create realistic camouflage patterns, announced the acquisition of Blizzard Buddy, expanding its product lineup. The company said in a media release that the acquisition “aligns perfectly with TrueTimber’s commitment to delivering top-of-the-line hunting apparel and gear that meet the demands of even the most challenging environments.” TrueTimber said the Blizzard Buddy extreme cold weather hunting suit “has gained a loyal following among hunters who require superior protection and comfort in freezing temperatures.” By integrating Blizzard Buddy’s technology and expertise into its existing product line, TrueTimber “aims to provide hunters with an even greater selection of high-performance gear.”
Cosmetics & Pharmacy
Walgreens says it will close 1,200 stores by 2027, as earnings top estimates
On October 15th Walgreens reported fiscal fourth-quarter sales and adjusted profit that beat Wall Street’s expectations, as the company slashes costs in an attempt to steer itself out of a rough spot. The retail drugstore chain also said it plans to close roughly 1,200 stores over the next three years, which includes 500 in fiscal 2025 alone. The company said those closures will be “immediately accretive” to its adjusted earnings and free cash flow. Walgreens has around 8,700 locations in the U.S., a quarter of which it says are unprofitable. Those closures will give Walgreens a “healthier store base” and “will enable us to respond to shifts in consumer behavior and buying preferences,” the company’s CEO Tim Wentworth said during an earnings call.
CVS replaces CEO Karen Lynch with exec David Joyner as profits, share price suffer
Longtime CVS Health executive David Joyner has succeeded Karen Lynch as CEO, as the company struggles to drive higher profits and stock performance, CVS announced on October 18th. The move, effective the day before the announcement, comes as CVS shares have fallen nearly 20% this year. The stock plunged 8% on October 18th. CVS has faced challenges as higher medical costs weigh on its insurance unit, Aetna, and as the retail pharmacy business has been pressured by softer consumer spending and reimbursement headwinds for prescription drugs. In August, the company slashed its full-year profit guidance for the third consecutive quarter and said it would cut $2 billion in costs over the next several years.
Pacific World Corp strikes £30 million deal for Nails Inc
Prospect Capital’s Pacific World Corp is reported to have acquired Nails Inc. Financial terms of the deal were not disclosed, but the UK-based nail brand is thought to be valued at £30 million. Founder Thea Green will remain in situ as head of the brand. According to a report published by WWD, the sale will enable Nails Inc to scale its retail and digital presence in North America. Green told WWD, “This collaboration marks a significant milestone in our journey, enabling us to bring our high-quality, cult items to a wider audience in North America. With Prospect’s support, we are excited to scale our business, build new partnerships and continue to drive innovation in the beauty space.”
Skyn Iceland Is Acquired by Amerikas
Amerikas, a beauty products distributor, has acquired the vegan, cruelty-free and natural skin care brand Skyn Iceland from a group of French and Swiss investors. Financial terms of the deal, which was made through Amerikas’ new investment branch, were not disclosed. Amerikas plans to lend Skyn Iceland its know-how in distribution and brand acceleration. “This new chapter in the development of Skyn Iceland will see the brand returning to its original Nordic beauty positioning,” Amerikas and Skyn Iceland said in a joint statement.
Discounters & Department Stores
Consumers to shop at discount department stores this holiday
In search of deals, 63% of consumers will shop for gifts at discount department stores, according to ICSC’s 2024 Holiday Shopping Intentions survey of 1,009 people. Meanwhile, a third will shop at traditional department stores. On average, shoppers plan to spend $706 on gifts and other holiday items, the most since 2018, according to the survey. Among the top items on shoppers’ lists are gift cards (58%); accessories, apparel and jewelry (52%); and toys, games, sporting goods and other hobby items (50%). While nine in 10 consumers said inflation will affect their holiday purchases, 37% of respondents plan to spend more this year. Of the consumers who plan to spend more this year, 42% are doing so because of higher prices, the survey found.
Bloomie’s to open fourth location
Bloomie’s — Bloomingdale’s small-format concept — is set to open its fourth location on Nov. 14 at The Grove Shopping Center in Shrewsbury, New Jersey, per a release. There currently are Bloomie’s locations in Fairfax, Virginia; Skokie, Illinois; and Seattle with plans to open more, per the company. This will be the first Bloomie’s in New Jersey and the first to offer an all-women’s assortment, which includes contemporary ready-to-wear, accessories, beauty products and fine jewelry. The latest 21,000-square-foot Bloomie’s in New Jersey will offer such notable brands as Mother, Veronica Beard, Rag & Bone, Cinq a Sept, L’Agence, Staud, Tory Burch, Chanel Beauty, Charlotte Tilbury and Roberto Coin. The New Jersey store will host a “winter wonderland” event at its grand opening, featuring branded activations and gifts, as well as a “holiday bash” on Dec. 7. The latter includes a meet-and-greet with Santa, a brunch with giveaways and music, holiday treat carts and “customization opportunities.”
Walmart names chief growth officer to head up new business group
Walmart has named Chief Revenue Officer Seth Dallaire as its chief growth officer of Walmart U.S., Walmart U.S. President and CEO John Furner said in an employee memo provided to sister publication Grocery Dive by the company. Dallaire will head up an expanded division at Walmart that also includes the product, marketing and design teams. The memo also noted that Walmart U.S. Chief Product Officer Jon Alferness is leaving the company. The changes come as Walmart transitions its business model from a focus on stores to omnichannel and focuses on accelerating growth for specific teams, the memo said.
Emerging Consumer Companies
Cacao brand Blue Stripes raises $20 million
Blue Stripes, the whole cacao brand on a mission to create a more ecologically and economically sustainable cocoa supply chain, closed its Series B round at $20 million led by Zintinus, The Hershey Company and Whole Foods Market, among others. Blue Stripes’ line of products includes Cacao Water, Whole Cacao Chocolate Bars, Whole Cacao Granola, Whole Cacao Trail Mix, Chocolate Covered Cacao Beans, and Dried Cacao Fruit. Blue Stripes was founded in 2018 by Oded Brenner, who also founded the global chocolate retail chain Max Brenner.
Hello Cake closes $18 million Series B and announces acquisition
Hello Cake, a leading sexual health and wellness brand, announced the closing of an $18 million Series B funding round led by Silas Capital and Strand Equity. Total funding for the sexual wellness brand has now surpassed $36 million. AF Ventures, a long-term investor in Hello Cake, is participating in the round and will join as a board observer, helping guide the brand’s expansion and growth efforts. The company also announced the acquisition of Trigg Laboratories, a pioneer in the personal lubricants category. The acquisition establishes Hello Cake as a vertically integrated sexual health company, poised to increase profitability, drive growth, accelerate IP ownership, and fuel product innovation.
Havenly acquires Burrow as it builds its portfolio of home brands
Havenly Brands announced it acquired furniture brand Burrow for an undisclosed sum, marking the company’s fifth acquisition in the past two years following deals for The Citizenry, Interior Define, St. Frank and The Inside. Burrow, which launched in 2017, became popular for its modular, flat-pack sofas and chairs that could be installed quickly without tools. Havenly plans to keep all four Burrow stores open, which are located in New York City, Chicago, Los Angeles and Boston.
SuppCo, platform for tracking supplements and health, raises $5.5 million
SuppCo, a health platform that helps people find consumer-trusted supplements, create and manage supplement routines, and track their health progress over time, raised a $5.5 million seed round co-led by Union Square Ventures and True Ventures, and including BoxGroup and Compound. The company was founded by Steve Martocci, cofounder of GroupMe, Blade, and Splice.
Food & Beverage
Emmi acquires Mademoiselle Desserts
The Emmi Group has completed its acquisition of French pastry manufacturer Mademoiselle Desserts Group. With the purchase, Emmi will create a “Desserts PowerHouse” that will double its sales share in the strategic premium desserts niche and allow the company to take on a leading role in the premium dessert category, which is growing on a global scale, Emmi said. The company has a leading market position in the European dessert market with 12 production facilities in France, the UK, The Netherlands and Belgium. The company’s products are available in traditional retail channels, complementing the existing portfolio of Emmi, especially in the in-store bakery sector, as well as in foodservice.
Activist Jana may push for sale of French fry maker Lamb Weston
Jana Partners has built a new position in Lamb Weston and may push the French fry maker to consider selling itself, the activist investment firm said in a regulatory filing on October 18th. Jana said it owns 5% of the Eagle, Idaho-based company and wants to see a strategic review where the company and bankers would review capital spending, operating deficiencies and consider repurchasing stock. The hedge fund also signaled that it might seek board seats at the company which currently has a market capitalization of $11 billion. Jana is working with Continental Grain, a privately held company that owns and operates companies in the food and agribusiness, on the investment, the filing said. It is also working with Lamb Weston’s former executive chairman, Timothy McLevis.
Grocery & Restaurants
Activist investors take a nearly 12% stake in Red Robin
Two activist investors have taken an 11.6% stake in Englewood, Colo.-based Red Robin Gourmet Burgers, according to a document filed with the U.S. Securities and Exchange Commission last week. JCP Investment Management purchased 7.9% of Red Robin’s total shares, while private investment firm Jumana Capital bought 3.7% of the casual-dining chain’s shares, causing a bump in Red Robin’s stock price last week. Both investment firms have long histories of becoming activist investors in struggling companies. Just over the past decade, JCP Investment took an activist investor role in Jamba, Potbelly, and Pollo Tropical owner Fiesta Restaurant Group, the latter of which was eventually sold and taken private. Red Robin had been navigating a tough time for the brand when the company unveiled a comeback plan during January 2023 ICR conference. This was all part of the casual-dining brand’s “North Star” plan to get back to its glory days, which included plans to elevate the guest experience, remove costs and complexity, and drive revenue and profitability.
SpartanNash acquires Fresh Encounter Inc.
Distributor and retailer SpartanNash is expanding its retail operations with the acquisition of Fresh Encounter Inc., a 49-store supermarket chain with stores in Ohio, Indiana, and Kentucky. Owned by third-generation grocers Michael Needler Jr. and Julie Anderson, Fresh Encounter has been a food distribution customer of SpartanNash for 58 years. “This acquisition is an exciting milestone in our company’s strategic growth plans,” said SpartanNash CEO Tony Sarsam in a press release. “Not only will we welcome 2,500 new Associates to the SpartanNash family, we will also begin serving shoppers in Kentucky and grow our existing footprint across Ohio and Indiana.” The acquisition expands SpartanNash’s retail footprint by 33% and is the company’s second retail acquisition in 2024, following the addition of the three-store chain Metcalfe’s Market in April.
Home & Road
Beyond to invest $40M in The Container Store
Beyond Inc. plans to invest $40 million in The Container Store through a strategic partnership. The partnership’s goal is to enable The Container store to return to profitable comparable store growth by leveraging Beyond’s intellectual property, customer data, brand network and affiliate relationships, the companies said in a joint press release on Tuesday. Under the deal, The Container Store locations will showcase spaces that feature Bed Bath & Beyond’s assortment for kitchen, bath and bedroom. The move brings the iconic brand back to physical shops about 18 months after the previous iteration of the company filed for bankruptcy and pivoted to e-commerce only under new ownership. The deal is contingent on The Container Store refinancing or amending its borrowing terms with lenders. The retailer plans to issue 40,000 shares of a new stock series at $17.25 to Beyond. With shareholder approval, the new stock would convert to common stock, giving Beyond a 40% equity stake.
True Value files for bankruptcy as Do it Best bids to acquire assets
Long-time hardware retailer True Value announced Monday it has filed for Chapter 11 bankruptcy and is entertaining a bid to sell its assets to competitor Do it Best. The home improvement industry deal, if approved, would create a network of more than 8,000 stores in the United States and around the world. “After a thorough evaluation of strategic alternatives, we determined that the sale of our business was the path forward to maximize value and best serve our retail partners and other stakeholders into the future,” said Chris Kempa, True Value’s chief executive officer.
Jewelry & Luxury
LVMH Jewelry, Watch Sales Down 5 Percent So Far This Year
LVMH’s watch and jewelry sales slipped again in the third quarter against a backdrop of global economic and political uncertainty and continued weakness in China. The Paris-based luxury conglomerate reported Tuesday that third-quarter sales in its Watches & Jewelry division totaled €2.39 billion ($2.60 billion) compared with €2.52 billion ($2.74 billion) a year ago, a 4 percent year-over-year decline on an organic basis. Year-to-date, LVMH’s watch and jewelry sales have totaled €7.54 billion ($8.21 billion), down 5 percent year-over-year (3 percent on an organic basis).
Two of the world’s biggest luxury brands may be sitting on a whopping €4.7 billion worth of unsold goods (around $5.1 billion at the current exchange rate). That’s enough to make even the most fashionable among us raise an eyebrow. What’s happening? LVMH and Kering, the parent companies behind brands like Louis Vuitton, Gucci, and Saint Laurent, saw their unsold inventory more than double between 2014 and 2023, according to La Conceria’s summary of Business of Fashion analysis. In 2023 alone, LVMH reported €3.2 billion ($3.5 billion) in unsold goods, while Kering clocked in at €1.5 billion ($1.6 billion). That’s a whole lot of handbags and stilettos gathering dust. Why is this excess inventory concerning? This mountain of unsold luxury items is bad for business and terrible for our planet. The fashion industry is already a significant contributor to Earth’s overheating, and excess production only amplifies the problem.
Luxury’s Last Growth Engine Has Stalled
Louis Vuitton’s owner seems surprised at how quickly Chinese consumers have closed their wallets and abandoned its brands. It has no obvious place to turn to next for growth. Shares in LVMH fell 7% on Wednesday morning after the world’s biggest luxury company released third-quarter results that were worse than expected. The main reason for the slowdown is that Chinese shoppers have pulled back. China has been a huge growth story for luxury brands over the past two decades. Back in 2000, Chinese customers generated just 1% of global luxury sales, according to UBS estimates. Today, they account for a third.
Office & Leisure
Sonesta to add 114 hotels to franchise portfolio
Sonesta Hotels plans to enter into a long-term franchise agreement for 114 hotels that it currently manages, after current owner Service Properties Trust (SVC) sells the properties, according to a Sonesta release obtained by Hotel Dive. SVC, a Newton, Massachusetts-based real estate investment trust, will sell the 114 hotels, representing 14,925 keys, to repay debt, SVC announced Wednesday. According to the trust, the portfolio is valued at $850 million. SVC expects to sell the hotels in 2025, after which, the existing long-term management agreements will convert to long-term franchise agreements with Sonesta, the hotel company detailed in the release. The deal will expand Sonesta’s franchise hotel portfolio of select-service and extended stay hotels, building on portfolio growth the Newton, Massachusetts-based hotel company has seen so far this year.
Stillfront ousts CEO and founder
Global gaming company Stillfront has ousted its founder and CEO, Jörgen Larsson. Stillfront’s board of directors has now commenced the recruitment process for a new CEO, appointing former president of publishing and business acceleration Alexis Bonte as interim CEO in the meantime. Chair Katarina Bonde said that while Stillfront’s financial position “remains strong,” the board has “concluded that a new leadership is the way forward.” “The efficiency measures we have taken continue to support increased profitability, and cash flow generation remains strong, as does our financial position,” Bonde said. “At the same time, Stillfront has important work ahead to improve the company’s growth and achieve the cost savings communicated in connection with the announcement of a new management structure with operations divided into three business areas.
Technology & Internet
Amazon launches Amazon Grocery, its newest grocery concept
A 3,800-square-foot ground-level retail space in a high-rise building in Chicago’s upscale Near North Side neighborhood is the site of Amazon’s next experiment in the supermarket business. The online retail giant launched its first “Amazon Grocery” location in a space that most recently served as a coffee shop for the Amazon-owned Whole Foods Market in the One Chicago Building. Amazon said in an email to Supermarket News that the new store carries 3,500 products and aims to capture Whole Foods shoppers looking to make quick trips for things like grocery top ups, coffee, and grab-and-go meals.
Amazon announces Colorsoft, first Kindle with color screen for $279
Amazon on Wednesday announced a new Kindle e-reader, and for the first time ever it has a color display. The retailing giant introduced the Kindle in 2007, and every device since then has had a black-and-white screen. The new Kindle has a display that’s designed to ensure colors don’t appear washed out or pixelated, even when users zoom in on images. The $279 device, which Amazon is calling the Kindle Colorsoft, has “weeks of battery life,” the company said. It can be preordered now and ships on Oct. 30. Amazon also unveiled a refreshed $399 Kindle Scribe with new note-taking features, an updated $159 Kindle Paperwhite and a 12th generation Kindle, which costs $109. At a press event in New York on Tuesday, Amazon’s devices chief, Panos Panay, called the updates the “largest single refresh that the Kindle lineup has ever had.”
Apple announces new iPad mini, available to order now and in stores Oct. 23
Apple announced a new iPad mini on Tuesday, offering the first update to its smallest tablet since 2021. The new iPad mini comes with a faster A17 Pro processor, the same chip that was in last year’s iPhone 15 Pro. That means it supports Apple Intelligence, the company’s new suite of artificial intelligence features that will slowly begin rolling out to users this month. During the company’s fiscal third quarter, Apple showed the strongest growth in its iPad segment, which grew about 24% year over year after it introduced several new iPads for the first time since 2022. Apple’s smallest iPad has attracted a fanbase of users who appreciate its more portable 8.3-inch screen for reading books or taking notes. The iPad Mini supports the latest Apple Pencil Pro, which was introduced alongside the iPad Pros earlier this year. It starts at $499, can be preordered now and launches in stores on Oct. 23.
Finance & Economy
Retail sales rose 0.4% in September, better than expected; jobless claims dip
Consumer spending held up in September, underscoring a resilient economy that is now getting a boost from the Federal Reserve, the Commerce Department reported on October 17th. Retail sales increased a seasonally adjusted 0.4% on the month, up from the unrevised 0.1% gain in August and better than the 0.3% Dow Jones forecast, according to the advance report. Excluding autos, sales accelerated 0.5%, better than the forecast for just a 0.1% rise. The numbers are adjusted for seasonal factors but not inflation, which rose 0.2% on the month as measured by the consumer price index. In other economic news, initial unemployment claim filings totaled a seasonally adjusted 241,000, a decline of 19,000 and lower than the estimate for 260,000, the Labor Department reported.
Treasury Yields Climb as Strong Data Sow Doubt on Fed Rate Cuts
US government bonds slumped after strong September retail-sales figures fanned doubts over how quickly the Federal Reserve will continue to lower interest rates. The selloff pushed Treasury yields higher by as much as seven to 10 basis points. Initially, short maturities led the move as traders trimmed bets that the US central bank will cut rates at its next several meetings, as most Wall Street banks have been predicting. Later, those yields retreated from session highs while 10- to 30-year rates continued to rise. “The market has been looking for continuing weaker economic data, and it has not been a consistent theme,” said Tom di Galoma, head of fixed income at Curvature Securities. While a November rate cut remains likelier than not in his assessment, “that view is waning with many market participants.”
Homebuilder confidence rises in October despite mortgage rates increasing
Homebuilders are feeling more confident about the housing market despite a recent sharp rise in mortgage rates. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index rose two points to 43 in October from the previous month, marking the second consecutive monthly gain. October’s reading was higher than economists’ estimates of 42, per Bloomberg data. Still, any reading under 50 indicates that more builders view conditions as poor rather than good. NAHB CEO Jim Tobin told Yahoo Finance after the release that a primary driver of the increase is the Federal Reserve’s recent move to bring down interest rates.
