On November 5, Congress passed the Infrastructure Investment and Jobs Act, which President Biden will sign when Congress returns to session this week. If the associated revenue changes are approved through the budget reconciliation process, the U.S. will commence what The Brookings Institute calls “a building spree larger than what happened during the New Deal.”
The bill’s $1.2 trillion headline cost features $550 billion of new spending above baseline budgets. Taking into account revenue generating elements of the plan and the re-purposing of unused COVID stimuli, the Congressional Budget Office estimates that the bill will add $256 billion to the deficit over the next decade.
The bill contains specific allocations for roads, bridges, railways, airports, ocean ports, public transportation, low-carbon and zero-emission public transit vehicles, electric vehicle charging stations, broadband infrastructure in rural and urban communities, power grid upgrades, clean water system improvements, pollution control, environmental remediation, cybersecurity, and redundancy and resiliency projects. During the budget reconciliation process, Democrats are expected to seek to add additional spending for matters directly related to climate change mitigation and adaptation.
Biden called the bill a “once in a generation investment” that would “create millions of jobs and improve the domestic economy,” according to the Washington Post. Elaborating, the President said, “the vast majority of the thousands of jobs that will be created do not require a college degree. This is a blue collar blueprint to rebuild America.” How many jobs? In an interview on NPR, Christelle Khalaf, Associate Director of the Center for Business and Economic Analysis at the University of Wyoming estimated that the act will create 1 million construction jobs alone over the next five-years. Not included in this number, however, are healthcare jobs as Congress left related components of Biden’s plan on the cutting room floor in order to reach a compromise on the bill.
While consumer and retail businesses may rightly be excited about more funds flowing into consumer wallets, politicians are quick to say the infrastructure bill is not a stimulus bill, but rather an upgrading of America’s critical systems to enable the country to remain competitive for the rest of the 21st century. They are right to dampen enthusiasm for two reasons. First, much of the bill calls for federal, state and local agencies to administer grant programs; programs that may take a year or longer to sort out. Many government agencies and boards are not set up to implement much of what the bill requires of them, and they will need time and incremental staffing to be able to put the money to work. Moreover, these agencies typically need local buy-in, which can result in further red-tape and delays. Economists think so-called “state of good repair projects,” such as road projects, can be implemented soon, while most others will take a year or two to begin.
The second factor is an alarming shortage of appropriately skilled labor. Speaking to the New York Times, Beverly Scott, the vice chair of the President’s National Infrastructure Advisory Council, said “do we have the work force ready right now to take care of this? Absolutely not.” Construction Industry Resources, a data firm in Kentucky believes that the construction industry could face a shortage of at least two million workers through 2025, creating a significant drag on putting this money to work. A $100 billion package for labor retraining targeted toward construction and technology skills and apprenticeships may have helped, but this idea was also sacrificed to get the bill approved.
Ultimately, while government money will continue to be pumped through the system, these new funds will take some time to turn into meaningful consumer spending.
Headlines of the Week
Richemont is reversing course on a solo effort to build a luxury e-commerce platform and is preparing to cede control of Yoox Net-A-Porter via a deal with web-shopping specialist Farfetch Ltd. The move follows reports that activist investor Dan Loeb bought a stake in the Cartier owner, which has been struggling to make its online business profitable since taking full control of it three years ago. Richemont shares rose as much as 9.8% to a record Friday after the company also reported first-half earnings that beat estimates. Farfetch, a London-based luxury e-commerce company, is in advanced talks to buy a minority stake in Yoox Net-a-Porter, Richemont said Friday. The goal is for the unit, known as YNAP, to be a neutral platform with no controlling shareholder. Other luxury-goods makers have shown strong interest in joining as well, the owner of Vacheron Constantin said.
Hershey is buying fast-growing Dot’s Homestyle Pretzels and its Midwest co-manufacturer Pretzels Inc., for $1.2 billion — a combined deal that would be the second-largest deal in its history — in an effort to broaden the company’s snacking portfolio and reach more consumers with a broader mix of salty and sweet offerings. The purchase of premium pretzel brand Dot’s would further quicken Hershey’s push into the permissible salty snack category, an area where the company has previously been underrepresented. Hershey is acquiring a brand that in only five years has captured a 9% share of the $2 billion pretzel category.
Apparel & Footwear
Last September, in a Central London hotel lobby during Fashion Week, a friend’s 16-year old son Frank looks me dead in the eye and tells me True Religion — along with Ed Hardy and Juicy Couture — are all the rage among he and his friends. I’m not buying it. I should have listened to Frank, as less than a week later Supreme dropped its latest collab. Models, including London-based artist SOLDIER, wore a collection in collaboration with True Religion. I call True Religion’s CEO Michael Buckley and the brand’s Creative Director Zihaad Wells, two long-term True Religion executives who recently rejoined the business. “When Michael and I came back to the brand around 2019, the first thing I did was ask my youngest daughter, who was 16 at the time, what she thought of the brand,” says Wells. “She was like, ‘Dad, listen, everyone wears True Religion at school.’ That was interesting to me, because what that said was that there’s a loyal customer base and a real attentive, active audience in that younger age range who want this brand and are thrifting it. [Meanwhile] with other brands, their customers are just growing older with them.”
US-based lifestyle apparel and accessories company Centric Brands has partnered with brand acquisition and management firm WHP Global to purchase Joe’s Jeans. Founded in 2001, Joe’s Jeans offers denim, apparel and accessories at premium department stores and specialty boutiques across the US, as well as ten Joe’s Jeans stores. The brand’s products are also available via its online flagship store. The financial terms of the transaction have not been disclosed, but it is thought to be worth $48.5m. The deal has received court approval and its completion is subject to customary closing conditions. Centric Brands CEO Jason Rabin said: “We have significantly invested in Joe’s Jeans throughout our years of operation and have established the brand as one of the leading premium denim resources. “Celebrating its 20th year, we look forward to partnering with WHP Global to further develop the brand and new avenues to grow the business.” Once the deal is completed, WHP will own Joe’s Jeans’ intellectual property in all global territories except China.
Global Brands Group is winding down its operations. Last week, the Hong Kong-based company said that after a hearing on Friday in Bermuda, the court ordered that the company be “wound up.” The case has now been converted to a liquidation. But for GBG, the handwriting has been on the wall for a while. In July, GBG’s North American arm filed Chapter 11 in New York and sought to sell its assets, which included the successful disposition of both the Aquatalia and Ely & Walker brands. Bidding and auction processes for the Sean John, Juniper and Air Brands are ongoing and expected to close before the end of this month, GBG said. Reports indicate that both Sean “Diddy” Combs, founder of the Sean John brand, as well as Jeff Tweedy, its longtime president, are interested in rescuing the brand, but they are not working together. Even if the sale is completed, it isn’t enough to rescue GBG, which has slowly been sinking for months. In October, the company’s German subsidiary filed for insolvency, followed on Nov. 1 by the U.K. division. On Nov. 2, it sold its Fiorelli brand for just over $3 million to Centric Brands International Europe Limited and said it would use the funds to pay the expenses of the U.K. administration fees.
Wolverine World Wide, Inc. reported strong financial results for the third quarter ended October 2, 2021, and updated its 2021 fiscal-year revenue and earnings outlook to reflect recent supply chain challenges. “The Company delivered strong double-digit revenue growth and exceptional earnings leverage, despite the increased supply chain disruption caused by Vietnam factory closures and global logistics delays” said Blake W. Krueger, Wolverine Worldwide’s Chairman and Chief Executive Officer. “The unplanned supply chain disruptions resulted in at least a $60 million negative revenue impact in Q3. Demand for our brands remains very strong as evidenced by continued strength in sell-through trends at retail and a robust order book that extends into Q3 2022. We remain bullish on our outlook for the future in light of these trends and the composition of our portfolio which over-indexes on performance categories like hiking, running, and work. We are also excited about the addition of Sweaty Betty to our portfolio – a fast-growing brand that enhances the digital and apparel capabilities of the Company.” On August 2, 2021, Wolverine Worldwide acquired women’s activewear brand Sweaty Betty, a digitally-native, premium global apparel brand, which is expected to fuel growth and enhance the Company’s fast-growing eCommerce business.
Ana Andjelic, Banana Republic’s chief brand officer, has abruptly left the company after only nine months on the job. “Ana is no longer with Banana Republic,” said Sarah Staley, head of Gap and Banana Republic communications, confirming information obtained by WWD. “We thank her for her time with the brand and wish her the best,” added Staley. “Sandra Stangl, president and chief executive officer of Banana Republic, continues to lead our mission to be the premier lifestyle brand that enhances people’s lives through elevated personal style and product.” The company did not provide an explanation for Andjelic’s departure. Stangl recruited Andjelic in February 2021. Andjelic previously had stints at Mansur Gavriel and Rebecca Minkoff. Banana Republic designers worked under her supervision. Andjelic’s departure could be related to whether Banana’s new positioning, which Andjelic was instrumental in formulating, has resonated with shoppers or hasn’t.
Athletic & Sporting Goods
German sportswear company Adidas warned of a 1 billion euro ($1.2 billion) hit to sales from factory closures in COVID-hit Vietnam and supply chain bottlenecks that it expects to affect business into next year. Factory closures in Vietnam from July to September and a gradual re-opening since October meant Adidas had lost capacity for 100 million items in the second half of 2021, finance chief Harm Ohlmeyer told journalists. That was exacerbated by delays to container shipping at both origin and destination ports, with a third of shipments leaving Asia with significant delays, Ohlmeyer added.
Fleet Feet, the largest franchisor of locally owned and operated running stores, announced that it has agreed to acquire JackRabbit, the second-largest running specialty retailer in the U.S., from affiliates of CriticalPoint Capital. Terms were not disclosed. The transaction is expected to close in early December 2021 and includes approximately all 60 JackRabbit locations across 15 states and its jackrabbit.com e-commerce business. JackRabbit, originally called the Running Specialty Group, was founded in 2011 as a specialty running store consolidation effort by The Finish Line. In 2017, affiliates of CriticalPoint Capital acquired JackRabbit and focused on accelerating its omnichannel growth through a digital strategy.
Cosmetics & Pharmacy
Coty said FY 2022 first quarter sales increased 22%, due to strong brick and mortar growth and a 23% gain in online sales. In addition to its Q1 results, Coty said it will sell an additional stake in the company to Wella. “Q1 marks the fifth consecutive quarter of Coty delivering results inline to ahead of expectations,” said Coty CEO Sue Y. Nabi. “Importantly, our Q1 results exemplify the virtuous cycle that we have been working to create, where our strong topline performance coupled with sustained gross margin expansion and cost initiatives, fuel both profit expansion and targeted re-investments to support future growth.” Nabi says she feels confident about the company’s prospects for the remainder of the year and is therefore raising the FY22 sales outlook to low-to-mid teens growth from the previous guidance of low teens growth.
Japanese cosmetics giant Shiseido announced on Wednesday a 14 percent jump in net sales, for the nine-month period ended September 30. Net sales totaled 745.37 billion yen (US$6.5 billion) driven by growth in Americas, EMEA, and travel retail, which offset the continuous weak momentum in Japan and slowdown in China, due to the spread of new Covid-19 variants and torrential rains. “In the first nine months of the fiscal year 2021, global economic conditions remained challenging, as economic activity was stagnant due to the Covid-19 pandemic, and consumer sentiment was low due to worsening corporate earnings and employment,” the company said in a statement. The company recorded a net profit of 36.76 billion yen, while operating profit nearly tripled compared with the same period a year prior, coming in at 8.91 billion yen.
Discounters & Department Stores
Dillard’s on Thursday did the department store segment proud, with total third quarter retail sales up 47% year over year and 9% from 2019 to $1.46 billion. Total retail sales don’t include the company’s construction business. Store comps rose 48% year over year and 12% from 2019, with sales of juniors and children’s apparel and men’s apparel and accessories “significantly” outperforming other categories compared to two years ago, according to a company press release. Net income soared 518% year over year to $197.3 million, thanks in part to a net tax benefit of $32.4 million from the Coronavirus Aid, Relief and Economic Security Act. Retail gross margin (excluding construction sales) expanded to 46.7% from 36.6% a year ago, a 1,221 basis point jump from 2019, the company said.
Following the lead of other large retailers, Macy’s on Tuesday announced that it is raising its minimum wage to $15 per hour and offering a debt-free education benefit, according to a company press release. The retailer has already phased in the $15 hour rate “across several markets” and plans to achieve a national rollout by May 2022. Over the summer Macy’s enacted pay increases to $15 an hour for all distribution center workers. “Once all these investments are made, average base pay will be above $17/hour and average total pay will be $20/hour,” according to the company. Macy’s will also offer corporate and hourly workers one additional flexible paid holiday so workers can “take a day off on a holiday that is most important to them,” per the release.
Target’s private label roots go way back. In 1995, it introduced Archer Farms to its merchandising mix — its first-ever owned food brand. Its initial offerings were the type of unfabulous essentials consumers would purchase on an average grocery trip: bread, milk, pasta and bottled water. But over the years, Target’s assortment of owned brands, also known as private labels, steadily inched into various categories with the launch of brands like Room Essentials in the home space, Cat & Jack in kids apparel and Heyday in electronics. The outcome of Target’s private label blitz was nothing short of astonishing. Target now boasts 48 private brands on its roster — 10 of which are worth a billion dollars, a Target spokesperson confirmed to Retail Dive. During the first quarter of 2021, Target nabbed $1 billion in market share, and its private label brands rose 36%, the strongest growth the retailer has recorded.
Emerging Consumer Companies
Curated, the San Francisco-based online platform that connects consumers with industry experts when considering the purchase of specialty goods online, has raised a $75 million Series C. The round was led by CapitalIG with participation from existing investors Forerunner and Greylock. The latest round gives the company total funding of $141.5 million and follows a $39 million Series B announced in April. The new funding will be used to double the company’s team of 100 and expand into new categories. Curated has eight categories today, including sporting equipment for skiing, golf, camping, hiking and biking. It has plans to launch 15 to 20 more in the next year, including coffee and home goods, like barbecues.
Ladder, a strength training app with weekly programming and a variety of coaches and training styles to choose from, raised a $6.5 million seed round. The investment was led by LivWell Ventures, with additional investors including Keller Capital, Brett Hurt of Hurt Family Investments and former Co-Founder and CEO of Bazaarvoice, NFL wide receiver Danny Amendola, and Co-Founder & CEO of Athletic Brewing Bill Shufelt. Women’s Health named Ladder the 2021 Best Strength Training Fitness App and the 2021 Best Fitness Community.
Food & Beverage
The board of directors of private label manufacturer TreeHouse Foods, Inc. has initiated a strategic review that may involve the sale of all or part of the company. Breaking up the company would entail divesting a portion of TreeHouse’s Meal Preparation business unit to allow management to focus on the Snacking and Beverage unit, according to the company. The announcement followed release of the company’s third-quarter results, ended Sept. 30. For the first nine months of fiscal 2021, TreeHouse Foods earned $16.6 million, equal to 3¢ per share on the common stock, and an improvement over the same period of the previous year when the company recorded a loss of $20.6 million. Earlier this year investment company Jana Partners, which at the time owned a 7.5% stake in TreeHouse Foods, urged the board of directors to explore a strategic review and possible sale. The two sides reached a “cooperation agreement” in March that included the addition of two Jana-supported independent directors to the board.
The founders of Oatly and the co-founder of Fiji Water have relaunched Good Idea functional sparkling water in the U.S. The brand is known for its scientifically proven ability to reduce blood sugar levels with a blend of five amino acids and chromium. The zero-calorie, zero-carb drinks contain no sweeteners, caffeine or artificial colors. Good Idea’s blend of amino acids adds yet another offering by food and beverage manufacturers to address high blood sugar, a phenomenon that can not only lead to individual health problems but impact society through lost productivity.
Grocery & Restaurants
Panera Brands on Tuesday said it will return to the public markets in a transaction that will bring in as a cornerstone investor a special purpose acquisition company, or SPAC, led by New York restaurateur Danny Meyer. The group that is Panera Brands includes the fast-casual chain Panera Bread, along with Caribou Coffee and Einstein Bros. Bagels, with a total of about 4,000 units across 10 countries. Under the deal, Panera Brands will hold an initial public offering and then merge with USHG Acquisition Corp., the SPAC known as “HUGS,” as a cornerstone partner. The IPO price or number of shares were not disclosed. In addition, Meyer will invest personally in Panera Brands and become lead independent director of the public company’s board. Europe-based JAB Holding Co. bought a controlling stake in Panera Bread in 2017 in a $7.5 billion deal and brought in the coffee brands earlier this year to create the Panera Brands platform.
Pacific Bells LLC, one of the largest Taco Bell franchise operators, has been acquired by investment firm Orangewood Partners, the company said Thursday. Terms were not disclosed. The Vancouver, Wash.-based franchise group was previously owned by Partners Group, a global private markets firm that invested in 2015 and supported the franchisee through a period of rapid expansion through acquisitions and organic growth. Under the deal, Pacific Bells’ founder and CEO Tom Cook and others on the management team will retain a significant minority stake in the company and will continue to operate the restaurants. With more than 250 Taco Bell locations, Pacific Bells was founded in 1986 in Oregon, and has since grown to include units in nine states, including Alabama, Arkansas, California, Mississippi, Ohio, Oregon, Tennessee, Washington and Wisconsin. Under the new ownership, the group plans to continue its growth through both acquisition and new unit openings in current and additional markets, the company said.
Home & Road
Lifetime Brands posted flat sales and a drop in net income but an increase in gross profit in the third quarter despite inflationary and supply chain disruptions. Consolidated net sales were $224.8 million in the three months ended Sept. 30, practically identical to sales in the year-ago period. Gross margin in the quarter was $83.1 million, compared to $78.8 million for the corresponding period in 2020, a 5% gain. Net income decreased roughly 9%, from $13.9 million in the year-ago period to $12.6 million in the most recent quarter. “We are pleased to report another strong quarter of growth in a challenging macroeconomic environment, as we continue to see robust demand for our products,” said CEO Rob Kay. As a result, the company has raised its guidance for the full year. It now estimates that sales for the year ending Dec. 31, 2021, will be between $870 and $890 million. Adjusted net income for the year is now estimated to be $31.2 to $33.9 million.
Norwest Equity Partners, a leading middle market investment firm founded in 1961, has made a significant investment in Thibau, a leading designer and supplier of premium branded wallcoverings, fabrics, and furniture with an established reputation in the interior designer community. The transaction closed on November 9, 2021. Financial terms of the transaction were not disclosed. Established in 1886, Thibaut is the nation’s oldest continuously operating wallpaper company. The Company’s product offering has broadened over the years to include a variety of wallcoverings, fabrics, tapes/trim, and woven upholstery fabrics. Thibaut has become synonymous with beautiful traditional and transitional designs in signature color palettes — ranging from historic reproductions and traditional, classic patterns to more contemporary and novelty designs.
Vertically integrated bedding brand Purple Innovation reported net income of $2.1 million for the third quarter ended Sept. 30, compared with a net loss of $87.2 million in the same quarter last year. Net sales for the quarter dropped 8.7% to $170.8 million, compared with net sales of $187.1 million in the same quarter of 2020. The company’s wholesale revenue increased 9.6% for the quarter, and Purple’s direct-to-consumer sales dropped 15.9% compared with the same quarter in 2020. Joe Megibow, Purple CEO, repeatedly called the quarter “one of the most challenging quarters” for the company, citing a manufacturing backlog and lack of inventory during a call with the financial community. The company reported an adjusted loss per share of 7 cents, compared with adjusted earnings per share of 27 cents in the year-prior quarter. Megibow said the company pulled back on its advertising and marketing expenditures during the quarter, and that move also impacted results. The company said it is now ramping back up its advertising.
In its recent earnings report for the third quarter ended Sept. 30, Berkshire Hathaway’s retail segment showed revenues of $21.3 billion for the quarter and $62.1 billion for the first nine months of the year, an increase of 10.2% and 12.3% respectively. Home furnishings group revenues increased 11.7% in the third quarter and 27.5% in the first nine months of 2021, as compared with the same periods in 2020, attributable to higher consumer demand and higher average selling prices. The retailing segment includes four home furnishings retailers — Nebraska Furniture Mart, R.C. Willey, Star Furniture and Jordan’s — as well as its largest retailing business, Berkshire Hathaway Automotive, and three jewelry businesses, See’s Candies, Pampered Chief, Oriental Trading Co. and Detlev Louis Motorad.
Online home furnishings marketplace Chairish reported 22% growth in the third quarter of 2021 as consumers began turning attention toward vintage and resale pieces as a way to get around retail supply chain issues. For fiscal year 2021, Chairish is projecting combined pro forma revenue growth of more than 35%, led by more than 20% growth in average order value. In the quarter, Chairish’s active buyers reached 95,000, which marked a 27% year-over-year increase, and more than 860,000 vintage, antique, contemporary and made-to-order products offered by some 12,000 worldwide sellers. Other benchmarks from the quarter included a community of more than 38,000 verified design professionals, an international audience that accounts for some 5 million monthly visits and the offset of 100% of estimated carbon emissions from U.S. shipping.
Online home furnishings marketplace 1stDibs posted a 22% increase in year-over-year net revenue for the third quarter of 2021, but its net GAAP loss widened. The New York-based marketplace, which sells vintage, antique and contemporary furniture, home décor, art, jewelry, watches and fashion, posted net revenues of $25.6 million in the quarter as well as $18.1 million in gross profits, a 23% increase year-over-year. However, its GAAP net loss was $6.6 million for the quarter, compared with $1.4 million in the same timeframe in 2020. Non-GAAP Adjusted EBITDA and adjusted EBITDA margin was a loss of $5.4 million and 21%, respectively, compared with a loss of $500,000 and 2.2%, respectively, in the third quarter 2020. For the fourth quarter of 2021, 1stDibs issued guidance of GMV of $117 million to $121 million, net revenue of $26.5 million to $27.2 million and an adjusted EBIDTA margin at a loss of 18% to 21%.
Jewelry & Luxury
Watches of Switzerland just acquired five stores belonging to leading independent watch retailers in the U.S. as it continues its North American expansion. The company scooped up Ben Bridge at Mall of America outside of Minneapolis-St. Paul; Timeless Luxury Watches in Plano, Texas; and three Betteridge stores in Greenwich, Connecticut, and Vail and Aspen, Colorado. Terry Betteridge, who was recently inducted into National Jeweler’s Retailer Hall of Fame, and his family will continue operating the location in Palm Beach, Florida. The acquisition prices were not disclosed, but the combined annual revenue from the five acquisitions is approximately $100 million, according to a company spokesperson.
Jewelry subscription platform Rocksbox is expanding its collection of gender fluid jewelry. It joins a growing number of jewelry companies, like Blue Nile and John Hardy, that have introduced lines free of gender-specific labeling. The company partnered with Rebl for its gender-free assortment, a jewelry brand that prides itself on being “all-inclusive and diverse,” per the brand’s website, with a focus on eco-friendly practices. Its jewelry is made of hypoallergenic stainless steel and plated in 18-karat gold using a process it said creates less chemical waste than the traditional plating processes.
Following a sharp contraction during the first year of the corona crisis, the global personal luxury goods industry has come roaring back in 2021 and expected to hit €283 billion by year end, according to the latest market analysis by Bain & Company and Fondazione Altagamma. This time round last year, the personal luxury goods industry – spanning anything from jewelry to high end watches and expansive bags and accessories – was in shambles. The sector had just seen more than €50 billion wiped off from its market value, throwing the industry back to 2014 levels. In May this year, the authors predicted the personal luxury goods industry would need “years to recover to its pre-pandemic level”, but in the in between six months, consumers have staged a remarkable comeback in terms of spending. The strategy consulting firm has now revisited its prediction to €283 billion, meaning that the sector will have closed Covid-19’s income gap in the space of just one year.
Office & Leisure
Bookstore workers across the United States are beginning to unionize in an unprecedented move, the Associated Press reported. Unionization across many industries has increased dramatically since 2020. However, doing so in the publishing industry is seen as a rarity. According to AP, bookselling is often synonymous with liberal politics and valuing knowledge over money. In fact, the first union contract for the bookstore industry is set for the anti-war establishment Moe’s Books in Berkeley, California. “I think COVID-19 was a rude awakening for bookstore workers, and really anyone who works with the public,” Moe’s Books buyer Owen Hill said. “We were given no say regarding safe working conditions, even though we were risking our health by showing up for work. ” It is not just Moe’s Books seeing workers begin to form unions. New York City’s Printed Matter and McNally Jackson stores, Half Price Books stores in Minnesota, San Francisco’s Green Apple Books, Seattle’s Elliott Bay Book Company, and California’s Bookshop Santa Cruz are other bookstores that have either created their own unions or are attempting to make one.
The largest independent pet retailer in North America said it has 97 new store commitments signed year-to-date for 2021. With nearly 600 locations in 38 states, Pet Supplies Plus stores offer a wide assortment of natural pet foods, goods and services. The company ranked No. 76 in Franchise Times’ most recent “Top 400 Largest U.S. Franchise Systems” report. Pet Supplies Plus has also grown its footprint through acquisitions. In December, the company announced plans to acquire and rebrand an estimated 40 stores throughout Indiana, Kentucky, Maryland, New Jersey, Ohio, Pennsylvania, and Virginia that were previously operated by Pet Valu. “Entrepreneurs are going all-in to join the pet retail category,” said Chris Rowland, CEO of Pet Supplies Plus, Livonia, Mich.
SportPet, a Topspin Consumer Partners portfolio company, strengthened its position as a leading manufacturer and marketer of branded and private label pet products with its acquisition of Mission Pets. Since 1999, the San Francisco-based Mission Pets has been a leader in the pet lifestyle space, developing functional and novelty apparel, collars, leashes, bowls, bedding and home décor items for dogs and cats. Mission Pets’ products can be found in major brick-and-mortar retailers and through the Company’s website, Harrybarker.com. “We’re thrilled to add Mission Pets to our platform and believe their products will be highly complementary to our existing offerings,” says Adam Kellogg, SportPet’s CEO.
Party City revenue during the Halloween period rose 13.9% year over year to $415.5 million, with retail revenue up nearly 20%. The party goods retailer opened 90 Halloween City pop-ups for the season. That’s nearly four times the 25 stores it opened during last year’s season, when Party City scaled back its physical presence for a Halloween defined by the pandemic. The Halloween performance nearly closed the gap with October 2019 sales of $432.6 million. Party City has been uniquely challenged by the pandemic, which turned social gatherings into potential superspreader events. At the same time, many have pivoted to decorations and smaller-scale celebrations to brighten life up in stressful times. Halloween has baggage for Party City beyond the pandemic. It still lags behind 2019’s sales, which came in under the retailer’s own estimates and represented a likely loss of market share as online shopping gained traction. So along with the changes to the season the pandemic has shaped, Party City has needed to restore its relevance to consumers.
Technology & Internet
Chinese e-commerce giants Alibaba and JD.com set new sales records across their platforms on Singles Day, the largest shopping event in the world. The record sales come despite worries about the strength of the Chinese consumer and the impact of Beijing’s crackdown on technology companies. While Singles Day, also called Double 11, used to just be a 24-hour flash sale type of affair, it has transformed into a multi-day extravaganza, ending at midnight on Nov. 11. JD began sales in late October while Alibaba started at the beginning of November. This extended period has helped the companies continue to grow sales. Alibaba said gross merchandise volume (GMV) during the 11-day period totaled 540.3 billion yuan ($84.54 billion), a more than 8% jump from last year’s 498.2 billion yuan. JD said transaction volume on its platform totaled 349.1 billion yuan ($54.6 billion) during the Singles Day period, a 28% increase from the 271.5 billion yuan recorded last year. GMV and transaction volume do not translate into direct revenue for JD and Alibaba. They do, however, indicate Chinese consumers’ appetite to shop on the e-commerce giants’ platforms.
Rivian Automotive shares ended the day up 29% in their debut Wednesday, giving the Amazon and Ford-backed electric vehicle start-up a market valuation of $86 billion after one of the biggest IPOs this year. Shares of Rivian originally priced at $78 a piece Tuesday night, but popped more than 50% Wednesday when it opened at $106.75 per share, before paring some of those gains later in the afternoon. At its opening price, Rivian had an implied valuation of $91 billion. That puts Rivian past the market cap of Ford ($77 billion) and on par with General Motors ($86 billion). It’s still worth a fraction of electric vehicle pioneer Tesla, which has a market cap of more than $1 trillion. Rivian, which trades under the symbol “RIVN” on the Nasdaq, has attracted intense interest from investors looking to capitalize on the fast-growing EV market. But the company has yet to establish a business model and expects no more than $1 million in revenue for the third quarter.
Finance & Economy
Wholesale prices rose 8.6% from a year ago in October, their highest annual pace in records going back nearly 11 years, the Labor Department said. Elevated demand for goods over services again led the inflation story, with the price rises for final demand goods accounting for more than 60% of the index’s increase. Goods prices rose 1.2% compared with just a 0.2% increase for services, while construction prices jumped 6.6%. One-third of the increase in goods prices came from soaring gasoline, with prices rising 6.7%. Beef and veal prices represented the other side of the ledger, posting a collective decline of 10.3%. The index for light motor trucks, a key driver of inflation this year, moved lower as did residential electric power.
Household debt passed $15 trillion for the first time in the third quarter, as rising prices pushed up balances for homes and autos, the New York Federal Reserve reported. The household debt growth represented a 6.2% gain from the same period a year ago. The report covered the July to September period, part of a time when U.S. economic growth slowed to a 2% annualized pace amid worries over surging inflation and a pandemic-induced slowdown. Housing debt accelerated with $1.11 trillion in newly originated mortgages, more than two-thirds of which came from those with credit scores above 760 and just 2% to subprime borrowers, the Fed report said. The trend comes with median housing prices up 19.9% for the quarter to more than $404,700, according to the Census Bureau.