The Big Story

Strengthening the Consensus Food, Beverage, and Agriculture Practice

Lars Hem and Joe Crotty

We are pleased to be joining Consensus and helping to strengthen and formalize the firm’s Food, Beverage, and Agriculture practice.  The Food, Beverage, and Agriculture sector is an enormous part of the consumer economy, and we are thrilled to combine Consensus’s strong experience as a leading consumer-focused investment banking boutique with our deep industry expertise and relationships.  While Consensus has worked on behalf of Food and Beverage clients before, including FitVine Wine and Kettlebell Kitchen, the addition of our knowledge and experience can help the firm to take on opportunities across the food value chain; from the point when seeds are planted in the ground to when the consumer makes a purchase decision at the grocery store.  This “seed to shelf” perspective provides a differentiated set of capabilities for us to serve our clients.  We are excited to get started and look forward to connecting with the Consensus community to discuss relevant opportunities.

Some key trends we will be watching include:

  • The Impact of Technology on Agriculture: The implementation of technologies such as precision farming, automation, data and analytics, smart sensors, and robotics is revolutionizing the traditionally labor-intensive industry. Advancements in rural broadband connectivity, telematics and guidance technology are fueling the usage of tech-enabled agricultural solutions. This has given rise to site-specific, extremely localized crop management. AgTech has immense benefits for increased farm yield and reduced input usage. According to the USDA, the adoption of precision farming is at an early stage with huge market opportunity in the coming decades. Farming automation is expected to play a critical role in improving future farm profitability in the U.S., especially by increasing competitiveness.
  • The Plant-Based Protein Revolution: Plant-based foods are not just for vegans anymore.  More and more consumers are adopting a “flexitarian” approach to their diets, resulting in reduced consumption of animal products in the meat and dairy categories.  A recent report by Global Market Insights projects the plant-based market to grow to $155 billion by 2027, for a projected CAGR of 17%.  This large and rapidly growing market has led to significant investments in the alternative protein space.  The first half of 2021 saw over $1 billion of private equity and venture funding in alternative proteins, a 3.5x increase from the entire year of 2020 ($271 million total investment).

  • Functional Beverage Innovation: Sugar is out of favor as consumers seek functional benefits from their beverages.  Consumers now expect beverages to provide a broad range of health benefits, including improved digestion, more energy, enhanced relaxation benefits, and greater cognitive clarity.  Ingredients such as collagen, CBD, adaptogens and nootropics are being added to beverages to provide these types of benefits.  Globally, this $125 billion market continues to see significant innovation, venture capital funding and strategic M&A activity.

We will dive deeper into these trends and more in future Big Stories. In the meantime, we are excited to be part of the Consensus team and look forward to connecting with many of you soon.

Headlines of the Week

Coca-Cola is buying rest of BodyArmor for US$5.6B

Coca-Cola Co. agreed to acquire the remaining stake that it doesn’t own in BodyArmor for US$5.6 billion in cash, giving the soft-drink giant full control of the sports-drink brand and more ammunition to take on market leader Gatorade. Coca-Cola, which already owns 30 per cent of BodyArmor, is buying the remainder from investors including co-founder and Chairman Mike Repole. Coke’s interest in BodyArmor comes as the company has pivoted its growth strategy in recent years away from investment in mid-level and emerging brands and towards established big ticket acquisitions, such as Topo Chico or its $5.1 billion purchase of Costa Coffee. At the same time, the company has divested in a number of brands — Zico, Health-Ade, Odwalla and Suja, most notably — once seen as potential permanent additions to its portfolio, while also looking inward for innovation via brands like Minute Maid, Fairlife and its flagship soda line.


Allbirds Seeks to Raise Up to $269 Million in Market Debut

Allbirds has high hopes for its upcoming IPO. The sustainable sneaker brand will offer 19.2 million shares at a selling price between $12 and $14 per share, according to a filing with the Securities and Exchange Commission. At most, Allbirds says it could raise up to $269 million in its market debut, targeting an up to $2.2 billion valuation. The company has applied to list on the New York Stock Exchange under the symbol BIRD. When it initially filed for an IPO in August, Allbirds said it wanted to lead the way for a “Sustainable Public Equity Offering, or SPO,” which works with third-party organizations to make sure companies have well-defined environmental and social goals as they go public. In an Oct. 4 update to the original document, Allbirds amended this guideline to be called the “SPO framework” and eliminated almost half of the references to it in the filing. Allbirds has not yet listed a date for its expected market debut. According to filings, Allbirds has seen its net revenue go from $126 million in 2018 to $219.3 million in 2020. However, the company also revealed a net loss of $25.9 million in 2020.



Apparel & Footwear

Rent the Runway’s strong debut fizzles, as shares close the day down 8%

Rent the Runway had a strong start out of the gate Wednesday, but its gains vanished as its first trading day wore on and the stock closed down 8%. Shares started trading at $23 apiece, or 9% above Rent the Runway’s initial public offering price of $21. That initial surge gave the fashion rental platform a fully diluted valuation of over $1.7 billion. The stock ended the day at $19.29. On Tuesday, Rent the Runway’s IPO had priced at the top end of its expected range. It sold 17 million shares for $21 each, after marketing 15 million shares for between $18 and $21. Founded in 2008, Rent the Runway is in the midst of staging a comeback after demand for its clothing subscription service cratered in 2020. Last year, its valuation shrank to roughly $750 million as the pandemic weighed on Rent the Runway’s ability to attract users. According to CEO Jennifer Hyman, however, the health crisis ultimately helped make its business more resilient.

Galaxy Universal Will Acquire Active Brands from Sequential in $330 Million Deal

Sequential’s active brands have found a new owner. Galaxy Universal, LLC announced Friday that it will acquire Sequential’s active brand portfolio, which includes the And1, Avia, Gaiam and SPRI brands. The deal, which is valued at close to $330 million, is expected to close by mid-November and is subject to court approval. Galaxy was initially poised as the stalking horse bidder for the brands after it bid $333 million in August. The New York-based Galaxy markets, designs, sells, sources and manufactures athletic and work footwear in over 40,000 stores. The company also owns Hi-Tec, Interceptor, Magnum, Tony Hawk and is a licensee of the Justice, London Fog, And1 and Avia brands. Galaxy is a portfolio company of Gainline Capital Partners, a private equity firm. Global investment firm KKR, which led debt financing for the deal, will serve as a co-investor.

Clothing Brand Patagonia Is Now Making Wines. Are They Any Good?

But first, you may be asking yourself, as I did, why a successful company with a cult following for fleece jackets and fishing gear would get into the wine business. Turns out the company has been evolving ever since legendary outdoor adventurer Yvon Chouinard, now 82, founded it in 1973. “You never know where I’m going to go,” he says over Zoom. “I’m kind of a wild card.” Wine was actually a logical—and long planned—extension of Patagonia Provisions, the food division that debuted in 2012 after Chouinard recognized the critical role food plays in finding solutions to the environmental crisis. Food and agriculture, he’s often said, are a matter of human survival, not just another business venture. Discussions about adding wine to Provisions’ offerings began in earnest in 2018.


Athletic & Sporting Goods

Compass Diversified’s Marucci Sports acquires Lizard Skins

Baseball and softball equipment manufacturer Marucci Sports announced it has acquired Lizard Skins. Terms were not disclosed.  Lizard Skins’ leadership team — including founder Brian Fruit — is expected to continue leading the brand. Marucci Sports is a subsidiary of Compass Diversified, which last year purchased BOA Technology. BOA supplies dial-fit systems to many cycling shoe and helmet makers. Compass Diversified also is the former owner of CamelBak and Fox Factory.  Founded in 1993 with a focus on protection products for bicycles and riders, Lizard Skins expanded its grip technology to baseball and hockey. In addition to its bar tape being used by various pro cycling teams, Lizard Skins is also the official bat grip tape of Major League Baseball. In addition, Lizard Skins’ DSP hockey grip tape is a licensed product of the National Hockey League. In 2017, Lizard Skins acquired Ouray Grips.

JD Sports Buys 80% Stake in Cosmos Sports

Last month, JD Sports reported a record $505.9 million in pre-tax profit for the first half of the year. Now, the sports retailer has acquired an 80% stake in Greece-based Cosmos Sports.  With 57 stores in Greece and three in Cyprus under a mix of retail banners, Cosmos will boost JD’s footprint, adding to the more than 3,300 stores JD Sports already has worldwide.  EOS Capital Partners sold the 30% stake that it acquired two years ago, and founder Fragiskos Tsiknakis’ family lowered their stake from 70%. Cosmos recorded $60.5 million in revenue last year.

Cosmetics & Pharmacy

Hairstory Receives Minority Investment from Summit Partners

Hairstory, the detergent-free hair care brand, has received a minority investment. Growth equity firm Summit Partners has acquired a stake in the brand. Financial terms of the deal were not disclosed, although industry sources said the investment reached an estimated $30 million. Hairstory’s products are sold on a commission basis from partnering hairdressers, as well as directly through its website. Eli Halliwell, the brand’s chairman and chief executive officer, credits the business model for its growth. Although Halliwell didn’t comment on sales, sources said the brand was expected to reach $30 million in revenues in 2021. Scaling the business effectively is Halliwell’s first order of business with the recent investment. Halliwell attributes the brand’s high retention rates to the products themselves, which eschew detergents to mitigate the effects of over-cleansing hair.

Beauty retailer Birchbox acquired by women’s health care/beauty startup

The company that pioneered beauty subscription box retailing has been acquired. Birchbox has been acquired by FemTec Health, a women’s wellness startup focused on using technology and data for personalized care.  Terms of the acquisition were not disclosed. The company plans to relaunch Birchbox, shifting the focus from beauty to curated personalized skin and healthcare products. Birchbox subscribers can expect to see more wellness products soon, company founder Katia Beauchamp told Women’s Wear Daily. Launched in 2010, Birchbox opened a physical store in Manhattan’s Soho district in 2014. (The store closed in 2018). In 2018, it entered into a partnership with Walgreens.

Bottling Up Sunshine: Jacquemus Said in Beauty Deal With Puig

Simon Porte Jacquemus, the fashion designer who paints a tantalizing picture of the Provençale lifestyle, is bringing his sun-kissed brand vision to the beauty universe, WWD has learned. And he is partnering with Puig, the Spanish fragrance and fashion house renowned for its storytelling approach and brand-building prowess, according to market sources. It is understood the project is slated for introduction sometime in 2022. Details about the first product volley could not immediately be learned. Given the heat of the Jacquemus fashion business, his fervent social media following and such famous devotees as Kendall Jenner, Rihanna and the Hadid sisters, the designer’s foray into beauty is likely to attract widespread interest.

Discounters & Department Stores

Walmart, Gap Home add furniture to partnership

The collaboration between Walmart and The Gap is expanding. On a blog post on Walmart’s corporate website, Anthony Soohoo, executive vice president of home for Walmart U.S., announced that the online Gap Home collaboration will soon include furniture and the collection will be making its first brick-and-mortar appearance with a capsule collection of bedding styles at select stores. The inclusion of furniture to the collection, which launched in June with Gap Home décor, tabletop, bedding and bath options, is driven by Walmart’s vision that the consumer appetite for home furnishings won’t slow down soon. Gap Home furniture will be priced from $49.88 to $629 and will include sofas, ottomans, TV stands, headboards, rugs and more in the 150-item rollout. The line will include contemporary, Scandinavian, Mid Century and modern styles.

J.C. Penney taps Levi’s executive as CEO

Levi’s executive Marc Rosen will be J.C. Penney’s chief executive as of Nov. 1, the department store announced last week. Simon Property Group’s Chief Investment Officer Stanley Shashoua — who has been serving in the role in the interim since Jan. 1 — has been appointed executive chairman of the board, according to a company press release. Rosen has more than 25 years of retail and e-commerce experience. At Levi’s for more than seven years, he oversaw the direct-to-consumer business and digital strategy. Previously he was at Walmart for 14 years, in executive roles in e-commerce and information systems.

Walmart steps up delivery, online alcohol availability as holidays near

Walmart is extending its delivery hours until 10 p.m. and adding delivery windows during the holidays, Tom Ward, senior vice president of last mile for the retailer’s U.S. division, wrote in a company blog post on Thursday. The retailer has also expanded the number of stores offering alcohol delivery to 1,500 and boosted the number of locations allowing pickup orders for alcohol to 3,000. The moves are the latest in a series of steps Walmart has implemented to bolster its e-commerce operations ahead of the busy holiday season.

Target adds new features to same-day services

Target has added new features to its same-day services (Order Pickup, Drive Up and Same-Day Delivery with Shipt) to make consumers’ shopping trips run smoother and faster this holiday. Shoppers can now add backup grocery items in case their first choice is out of stock and pick which Target location a Shipt Shopper should shop at, according to a Tuesday press release. Consumers can also use the new Shopping Partner tool so that a friend or family member can pick up orders for them. In case consumers want to add an item after they placed their orders, Target has introduced a “Forgot something?” button in its app. Consumers can shop for the missing product and it will be added alongside their original order.



Emerging Consumer Companies

Eco-Friendly Washable Shoe Brand Rothy’s Seeks Fresh Funding

Rothy’s Inc., a direct-to-consumer footwear brand, is in discussions to raise funding that could value it at more than $1 billion, according to people with knowledge of the matter. It’s the latest eco-friendly brand looking to capitalize on growing interest in clothing and accessories that are better for the environment.  Rothy’s is working with an adviser on the funding round and could also explore other strategic alternatives including a potential sale of a majority stake, the people said, asking not to be identified because the matter is private.  The discussions are early and details of the round, including valuation, could still change, they added.  Co-founded by Roth Martin and former M&A banker Stephen Hawthornthwaite, Rothy’s last raised funding in 2019, when it received $35 million from Goldman Sachs Group Inc.’s asset management unit. The company was valued at $700 million at the time, people familiar with the matter said.


Bespoke Post raises $40 million

Bespoke Post, a New York-based multi-category e-commerce retailer, announced a $40 million Series B funding round. The investment was led by NewSpring with participation from Savano Capital Partners and Second Alpha along with existing investors Walden, Great Oaks, and 500 Global. The New York-based company was founded in 2011 to introduce customers to products from new brands once a month. The service has grown to over 300k active members.

Rowan, New York-based piercing brand, raises $20 million

Rowan, the female-founded ear piercing brand, announces it $20M Series B. The investment led by VMG Partners. Additional notable investors include Thirty Five Ventures, TABLE Management, Beechwood Capital, Silas Capital, Goldcrest Capital and entrepreneur Sara Foster. With the capital, Rowan will expand its brick-and-mortar footprint, with locations in Miami, Denver and Atlanta expected by end of Q1 2022; hire additional nurses; and build its product assortment of hypoallergenic jewelry to ensure that ear piercing is a celebratory and safe occasion for all. Founded in 2018, Rowan provides safe and celebratory ear piercing and hypoallergenic jewelry through its brick-and-mortar studio locations, Rowan at Target studios and at Rowan employs licensed nurses to provide ear piercing and related services and features exclusively hypoallergenic and nickel-free earrings. Currently located in over 250 Target locations nationwide, Rowan will be rapidly expanding to over 600 locations in early 2022. Rowan currently has two brick-and-mortar locations open in New York City and Connecticut, with additional locations opening in Denver, Miami and Atlanta by Q1 2022.



Food & Beverage

FGF Brands to acquire West Foods bakery assets for $1.2 billion

FGF Brands Inc. has reached an agreement to acquire the Weston Foods fresh and frozen bakery businesses of George Weston Ltd. for $1.2 billion. The purchase price represents approximately a 10x multiple on the 2021 estimated EBITDA of the Weston Foods fresh and frozen bakery business.  Weston Foods fresh and frozen bakery businesses serve retail and foodservice customers with packaged fresh bread and rolls as well as frozen and artisan bread and rolls, cakes, donuts, pies and alternatives throughout Canada and the United States. The company produces private label products and many well-known brands, including Wonder, Ace Bakery, Country Harvest, D’Italiano, Casa Mendosa, Dave’s Killer Bread and Gadoua.


Daring Foods Raises $65 million funding round; launches in Walmart

Plant-based chicken producer Daring Foods announced a $65 million Series C raise, as one of just a few companies to raise Series A, B and C in a single year. The round was led by Founders Fund, joined by existing investor D1 Capital Group, alongside notable new personalities, athletes and celebrities like Naomi Osaka, Cameron Newton, renowned DJ Steve Aoki, and Chase Coleman.  This brings Daring’s total raise to over $120M with earlier investors like Maveron, Palm Tree Crew, and rapper Drake.  The new funding is timely as Daring also announced plans for a major retail expansion into over 3,000 Walmart stores across the USA, doubling its distribution to 6,000 doors nationwide.

Nick’s closes $100M funding round

Swedish better-for-you ice cream and snacking brand Nick’s closed a $100 million Series C fundraising. The round was led by Kinnevik, Ambrosia and Temasek. Gullspang also participated in this round.  The company will use the money to bolster its North American and European growth by expanding its portfolio and doubling store count next year. Nick’s also plans significant R&D investments.  This is the second big funding round this year for Nick’s. In January, the company raised $30 million to fuel its international expansion efforts.


Builders Private Capital Launches $300M Clean Energy Investment Platform

Builders Private Capital (BPC), a system-driven, multi-stage, climate-focused organization investing across energy, food, agriculture, and oceans, announced that it has launched a $300 million clean energy investment platform. Stephan Feilhauer and Francis O’Sullivan have joined the organization as Managing Directors to oversee this new energy strategy, while Andrea Woodside has joined as Vice President, Real Assets. BPC is the direct investment arm of Builders Vision, an impact platform dedicated to building a humane and healthy planet.



Grocery & Restaurants

Sweetgreen launches initial public offering under ticker ‘SG’

Sweetgreen last week became the latest restaurant company to go public with its long-awaited move onto the New York Stock Exchange under the ticker symbol SG. First launched in 2007 in Washington, D.C., the healthful fast-casual concept has grown to 140 units in 13 states. Now based in Los Angeles, Sweetgreen boasts an average unit volume of $2.5 million, the company said in filings with the Securities and Exchange Commission. Sweetgreen reported revenues of $303 million in 2021 through Sept. 26, with about 68% of that revenue coming from digital orders. But the chain reported a net loss of $86.9 million year to date, an improvement from the loss of $100.2 million for the same period a year ago. Still, the prospectus outlined a brand well positioned for recovery with whitespace for growth, both domestically and internationally. The company plans to open at least 30 domestic units in 2021 and to double the current footprint over the next three to five years, according to the filing. The goal is to open in at least two to three new markets each year for the next three years. And Sweetgreen expects to grow its digital capability with secondary make lines that allow restaurants to handle more order volume without adding to costs or square footage, which the company said would allow it to adapt to rising off-premises demand.

Rapid Fired Pizza acquired by franchisees Pie Guys Restaurants

Rapid Fired Pizza — the 30-unit, Ohio-based pizzeria chain — announced Friday that the company has been acquired for an undisclosed amount by franchisees Mike Kern and Chip Hurst, under the company name, Pie Guys Restaurants LLC. Under the new agreement, Rapid Fired Pizza founder Ray Wiley has divested ownership and will continue on as a licensee, operating locations in Ohio – while Kern will serve as the new CEO and president and Hurst will be the company’s chief development officer. Rapid Fired Pizza was founded in 2015 and currently owns restaurants in six states. The brand is known for its personalized individual pizzas made in 180 seconds or less, as well as breadsticks, dessert, and wine and beer. Pie Guys Restaurants LLC is based in South Carolina, where co-owners Kern and Hurst operate the Rapid Fired Pizza locations in Spartanburg, S.C., Greenville, S.C., and Easley, S.C.

Home & Road

Private equity firm Arbor acquires Bradshaw Home – again

Arbor Investments, a specialized private equity firm that focuses on investing in food, beverage and related industries, has purchased Bradshaw Home from ONCAP, the middle-market private equity platform of Onex. The transaction marks the first investment from Arbor’s $1.5 billion Fund V, raised in late 2020, a release said. Terms of the deal were not disclosed. Bradshaw CEO Arthur Zambelli and senior leadership of the company will continue in their operating roles, it added. The purchase also marks Arbor’s second turn as owner of Bradshaw, having originally acquired the company in 2008 as a Fund II investment. After tremendous organic growth behind product innovations and expanded distribution, Arbor sold the business to ONCAP in late 2012, the release said. A leading designer, marketer and category manager of high-quality kitchen tools and gadgets, bakeware, cookware, food storage and home cleaning products, Bradshaw Home sells more than 7,000 products under the brands Good Cook, Casabella, Evercare, Mr. Clean, Clorox and Dawn, in addition to supporting retailers’ private label programs.

ABC Carpet to stay in business thanks to bankruptcy sale

ABC Carpet & Home, the more than a century-old New York luxury home goods retailer, will stay in business after winning court approval to sell itself to a group of investors. The sale is valued at about $26 million, a lawyer for the retailer said in a hearing Wednesday, though most of the consideration will come in the form of debt forgiveness. The company received no other acceptable bids. The buyer, called 888 Capital Partners, plans to invest $20 million into ABC and offer jobs to more than 50 of the company’s existing employees, according to court papers. 888 Capital expects the new ABC to break even in its first year and to be profitable thereafter, noting the company will be debt free when it exits bankruptcy. ABC filed for bankruptcy in September after Covid-19 cleared the city of many of its regular customers. The company traces its roots to the late 1800s, starting as a pushcart on Manhattan’s Lower East Side.

La-Z-Boy acquires U.K. upholstery business

La-Z-Boy UK has acquired upholstery manufacturing capability within Europe with the purchase of United Kingdom-based Furnico Furniture Ltd. Furnico has manufactured for the La-Z-Boy brand since it acquired the La-Z-Boy license in 2008. La-Z-Boy Inc. re-acquired the license in 2017. Furnico directors David Ellison, Stuart Shackleton and Nigel Ramsey will continue to lead the business; directors David Winter and Paul Riding will retire. The company intends to continue production from the two factory sites in Lancashire, with plans for a product showroom being discussed for the larger facility. The offices of La-Z-Boy International and La-Z-Boy UK will remain in Maidenhead, Berkshire. A significant amount of Furnico’s business was manufacture of La-Z-Boy product, with the remainder being white labeled to retailers in the United Kingdom and Ireland. Unbranded manufacture is set to continue alongside La-Z-Boy branded product.

Raw materials costs trim Sherwin-Williams Q3 sales

The Sherwin-Williams Co. saw consolidated net sales remain virtually flat for the third quarter ended Sept. 30, up 0.5% over the year ago period. Net sales were $5.15 billion for the 2021 quarter, while net sales from stores in U.S. and Canada open more than 12 calendar months decreased 2.8% for the period. The company noted in its earnings release that raw material availability negatively impacted quarter sales “by an estimated high single-digit percentage,” with about 75% of the impact showing up in The Americas Group. “Demand remains strong across our pro architectural and industrial end markets; however, results in the quarter were significantly impacted by ongoing and industry-wide raw material supply chain challenges,” said Chairman, President and CEO John G. Morikis. “We continue to implement price increases to offset higher raw material costs across the business and are confident margins will recover as inflation headwinds eventually subside.”

Jewelry & Luxury

Breitling Eyes IPO After New Shareholder Buys Stake

Swiss watch brand Breitling said it plans to go public in the next few years after Partners Group, a Swiss private equity firm, purchased a “significant minority stake” in the company. Financial terms were not disclosed. The statement said that Breitling planned to increase its direct-to-consumer sales and to expand the Breitling-owned retail network in the United States and Asia. It will also “continue to increase operational efficiency,” it said. Luxembourg-based CVC Capital Partners Fund VI, which purchased 80% of the company in 2017, will remain the company’s majority owner. Partners Group said it purchased its shares from both CVC and company management.

More Than Price and Design, Diamond Shoppers Look for Sustainability

Sustainability is now a leading factor in how consumers choose diamonds, according to the latest De Beers Diamond Insight report. The brand’s regular survey of global consumers found that almost one-third of them value sustainability in their natural diamond purchases, above price and design. The results surprised even the executives who looked at them. “I’ve been doing this for well over 15 years now,” says Esther Oberbeck, head of strategy at De Beers Group. “It didn’t surprise us that people care about these issues. It did surprise us that they put that right up there with pricing and design.”

Lab-Grown Diamond Jewelry Market May Almost Double By 2025

The market for lab-grown diamond jewelry is poised to almost double in size by 2025, predicts industry analyst Paul Zimnisky. In a new report, the veteran industry observer estimated the current lab-grown diamond jewelry market at close to $2 billion and 3 million carats. That’s huge growth for a market that produced only a few hundred thousand carats a year in 2018. Zimnisky believes the market will reach $3.9 billion by 2025. Lab-grown diamonds will then represent a mid- to high single-digit percentage of the overall diamond market. Ultimately, he says, it’s even possible that more created diamonds will be sold than naturals.


Office & Leisure

Hasbro says its toys will be ready for the holidays, despite the supply chain crisis

Hasbro said Tuesday that third quarter revenue was up 11% from a year ago, in line with forecasts. Sales surged 32% at its Wizards of the Coast and Digital Gaming unit, which includes the popular D&D and Magic games. Hasbro’s rapidly growing entertainment business, which produces a My Little Pony show for Netflix and owns the popular Peppa Pig and PJ Masks brands, soared 76%. The good news from Hasbro comes just a week after toy rival Mattel reported healthy sales and gave an upbeat outlook for the fourth quarter holiday shopping season. But Hasbro is also dealing with the loss of its long-time chairman and CEO Brian Goldner, who died last week at the age of 58…just days after the company announced he would be taking a medical leave of absence due to cancer. Hasbro noted that about $100 million in orders were not filled in the third quarter due to port congestion and other supply chain issues. That resulted in a hit to operating profit as a result of lower sales and higher freight costs. But the worst may soon be over.

Petco opens SoHo flagship dedicated to its private label

Looking to serve urban consumers, Petco on Thursday announced it opened Reddy SoHo, a flagship dedicated to the retailer’s three-year-old private label focused on premium pet goods. The store, located in New York City’s SoHo neighborhood, will also offer an “exclusive interactive experience,” including services for custom pet tags and product monograms, a fresh nutrition station from JustFoodForDogs and, soon, a concierge to plan activities with pets, according to a company press release. The new flagship is Petco’s first location dedicated to a single brand. As the pandemic brought numerous uncertainties to consumers’ lives, many turned to pets as a source of comfort.

Cosmic Pet, Petmate to Combine after Platinum Equity Acquisition

Platinum Equity recently announced the acquisition of Cosmic Pet, a leading designer, marketer and distributor of pet products, including toys, beds, collars and leashes, treats, feeders and bowls, and other accessories. Cosmic Pet will be combined with Platinum Equity portfolio company Petmate. Financial terms were not disclosed. Cosmic Pet leverages its portfolio of brands, which includes Hyper Pet, Pet Fusion, Our Pets, Pet Zone, Wild Eats and Pet Craft Supply Co, and a large and differentiated in-house international sourcing operation to serve the branded and private label needs of its blue-chip customer base. Petmate, acquired by Platinum Equity in September 2021, manufactures, sources and markets a diverse product line that includes plastic and wire pet kennels, dog houses, toys, food storage, bedding, treats and chews, and other pet-related products and accessories. Petmate CEO Alice Tillett will lead the combined company. Platinum Equity expects to continue using its M&A resources to help expand on the platform.

Goliath Acquires Endless Games

Goliath, founded in 1980, is one of the few remaining family-owned, global, toy and game companies, and is the distributor of a range of products, including Rummikub. They’ve recently acquired Endless Games, founded in 1996 by industry veterans Mike Gasser, Kevin McNulty, and game inventor Brian Turtle, and who contributed to the success of games such as Trivial Pursuit, Pictionary and Six Degrees of Kevin Bacon. Endless Games will continue to operate out of their New Jersey office and plan to fully integrate with Goliath’s distribution network by Q1 of 2022. Brian Turtle will join Goliath’s management team to help drive their business. Goliath currently sell products in 75 countries and has offices in Netherlands, Belgium, France, Spain, Portugal, Italy, Denmark, Germany, Poland, Hong Kong, Australia, New Zealand, USA and Canada.

Technology & Internet

Amazon says it’s prepared for supply chain snarls as holidays loom

Amazon last week reassured shoppers and industry watchers that it’s well-prepared to avoid supply chain challenges during the holiday season. In a blog post, Amazon said a combination of planes, trucks, ships and delivery vans, along with staffed up warehouses, has put it in a good position to “get customers what they want, when they want it, wherever they are this holiday season.” Retailers are entering what’s poised to be a particularly challenging holiday shopping period, due to existing supply chain woes, inflationary pressures and labor shortages. Several factors are behind the issues, including skyrocketing shipping container costs and container shortages, Covid-19 outbreaks at shipping ports, as well as a shortage of workers needed to unload containers and handle goods at warehouses. Amazon said it’s invested more in inventory planning and partnerships with suppliers to make sure it has enough goods on hand, while making sure it can route items to where they’re urgently needed. It’s also doubled its shipping container processing capacity by increasing ports of entry and partnered with more ocean freight carriers to secure space in “critical ports.”


PayPal says it is not about to buy Pinterest, shares jump

U.S. payments giant PayPal said it is not currently interested in buying social media platform Pinterest. Responding to what it called “market rumors,” the financial technology company said in an update on its website that it is “not pursuing an acquisition of Pinterest at this time.” A person familiar with the matter told CNBC that PayPal was in late-stage talks to buy social media company Pinterest last Wednesday, after it was first reported by Bloomberg. PayPal had discussed acquiring the company for a potential price of around $70 a share, which would value Pinterest at about $45 billion. PayPal had been pushed to consider buying Pinterest following competitive pressure from e-commerce platform Shopify, the CNBC source said. Shopify has heavily invested in blending e-commerce and fintech.


Finance & Economy

Retail trade group expects holiday sales to rise by all-time record, despite congested ports

Retailers will see eager holiday shoppers flock to their stores and websites even as some toys, clothes and other gift-giving items remain stuck at congested ports, according to a new forecast that cited rising household incomes and high savings rates.  The National Retail Federation said that it expects holiday sales during November and December to rise between 8.5% and 10.5%, which would total $843 billion and $859 billion of sales. The sales forecast excludes automobile dealers, gasoline stations and restaurants. However, shoppers will face challenging dynamics as retailers struggle to get goods from factories to store shelves because of congestion at ports, rising materials costs and a shortage of truck drivers. That is expected to translate into fewer discounts, longer shipping times and more out of stock items.

U.S. consumer confidence rebounds; house price growth likely peaked

U.S. consumer confidence unexpectedly rose in October as concerns about high inflation were offset by improving labor market prospects, suggesting economic growth was picking up after a turbulent third quarter.  The survey from the Conference Board showed consumers eager to buy a home and big-ticket items such as motor vehicles and major household appliances over the next six months. The share of Americans planning to go on vacation was the largest since February 2020, just before the nation was slammed by the first wave of COVID-19 infections.

Economic growth rate slows to 2% on a sharp slowdown in consumer spending

The U.S. economy grew at a 2% rate in the third quarter, its slowest gain of the pandemic-era recovery, as supply chain issues and a marked deceleration in consumer spending stunted the expansion, the Commerce Department reported.  Gross domestic product, a sum of all the goods and services produced, grew at a 2.0% annualized pace in the third quarter, according to the department’s first estimate. Economists surveyed by Dow Jones had been looking for a 2.8% reading.  That marked the slowest GDP gain since the 31.2% plunge in the second quarter of 2020, which encompassed the period during which Covid-19 morphed into a global pandemic that resulted in a severe economic shutdown that sent tens of millions to the unemployment lines and put a chokehold on activity across the country.

Read the full weekly consensus