Zappos has announced the launch of Goods for Good, a site featuring over 150 eco- and socially-conscious brands. Zappos features products on Goods for Good under the following categories:
The site currently features four “brand spotlights” telling the stories behind Fjällräven, Life Is Good, Tentree and Diff Eyewear.
Studies continue to find consumers, particularly members of Gen-Z and Millennials, are seeking out brands for sustainable and ethical reasons:
When a giant company like Zappos makes it so easy to shop with a purpose filter, the masses will respond. We as a nation need more of this in the near future, not less. Kudos to Zappos for acting boldly.
Anne Howe, Principal, Anne Howe Associates
I think that the risk/reward economics are pretty simple — at least initially. Zappos won’t have much upfront investment and if it works, i.e., if consumers actually buy the way they say they buy, the upside is fairly significant. The issue isn’t whether consumers — especially late Millennials and Gen Zers — believe in issues like sustainability and organics, it’s whether they are really ready to spend against those beliefs. That said, we are talking about 150 brands here, not 15,000, so the program is manageable. And many of these brands are small, niche players — so even a 2 or 3 percent hike in sales spells big success. As to how large the broader opportunity is, whatever the size of the market, it’s likely to be controlled by the prime movers. You really don’t want to be the 125th retailer or brander to discover their corporate conscience.
Ryan Mathews, Founder, CEO, Black Monk Consulting
As we see success with “purpose-driven” brands and efforts such as Zappos’ Goods for Good, we see more and more companies chasing the trend. I hope it’s not a trend. I like that Zappos is positioning this as a section of their parent site; it gives consumers a way to organize choices on their terms. Elevating it to almost-brand status is an interesting move. Perhaps they are testing the long-term viability of the “do good” component of consumer decision-making? I have concerns about the authenticity of similar efforts. I like to think that consumers are voting with their wallets and will support brands that really do good, but the research shows that the simple perception of doing good is sufficient.
Chuck Palmer, Senior Advisor, ConsumerX Retail
I appreciate the premise, and I believe “conscious consumption” will be a win for Zappos. The jarring part, for me, is the implication that non-Goods for Good products in the assortment are therefore morally inferior.
James Tenser, Principal, VSN Strategies
Socially conscious shopping is more than just a trend today – it’s an emotional response to consumerism and Zappos is brilliant for not just supporting the trend, but enabling people in a frictionless way to fulfill that desire.
Ricardo Belmar, Sr Director, Global Enterprise Marketing, Infovista
Headlines of the Week
LVMH confirms deal to acquire Tiffany for $16.2 billion
LVMH has reached a deal to buy Tiffany & Co. at $135 a share in cash, or $16.2 billion, in a move that will give the company more access to U.S. luxury consumers. Confirming the deal, which CNBC first reported on Sunday, LVMH said in a statement that “the acquisition of Tiffany will strengthen LVMH’s position in jewelry and further increase its presence in the United States.” It said it would also “transform LVMH’s Watches & Jewelry division and complement LVMH’s 75 distinguished Houses.” LVMH CEO Bernaud Arnault said that the company intends “to develop this jewel with the same dedication and commitment that we have applied to each and every one of our Maisons. We will be proud to have Tiffany sit alongside our iconic brands.”
Coty’s $600 million deal with Kylie Jenner is designed to hang on to her social media star power
Coty Inc. announced last week that it will take a 51% stake in Kylie Cosmetics, the blockbuster beauty brand from Kylie Jenner, for $600 million. The deal values Kylie Cosmetics at $1.2 billion. Together they will focus on global expansion of the brand, with Jenner and her team maintaining the lead on products and communications, including social media. Coty expects the transaction to add to net revenue growth by more than 1% annually over the next three years, and be neutral to earnings per share in the first year, but add to EPS thereafter. Kylie Cosmetics had estimated revenue of $177 million for the 12 months prior. The deal is expected to close in the third quarter of fiscal 2020. Jenner’s brands are Kylie Cosmetics and Kylie Skin, which launched in May and initially sold out in 10 hours. Coty says Kylie Skin is on track to reach about $25 million in sales for calendar year 2019. Coty will act as a licensee for skincare, nail products and fragrances.
Apparel & Footwear
Shares of Victoria’s Secret parent L Brands jump on fourth-quarter forecast, in-line profits
L Brands posted mixed third-quarter results Wednesday as declining sales at its Victoria’s Secret brand continued to weigh on its performance. The company’s earnings matched expectations, though revenue fell short. It also said its fiscal-year earnings would fall within a previously projected range. Investors have been hoping the company will find a way to revive its struggling Victoria’s Secret brand, and keep the momentum going at its faster-growing Bath & Body Works brand. But third-quarter results showed little evidence to support that. Same-store sales at L Brands’ total business fell 2% in the third quarter, a bigger drop than the 1% decline analysts forecast. Declines at Victoria’s Secret stores open at least a year accelerated, dropping 7% in the latest period compared with the 2% decline in the same quarter last year. Victoria’s Secret sales have declined as women increasingly opt for more inclusive lingerie brands such as Adore Me, Lively, ThirdLove and American Eagle’s Aerie.
Levi Strauss CEO: ‘Sizes will go out the window 10 years from now’
“I personally believe that the best innovation happens when you’ve got constraints,” Levi Strauss CEO Chip Bergh said on CNBC’s “Mad Money”. One physical constraint that the CEO of the 166-year-old denim brand thinks has a major innovation in store is body size. “Sizes will go out the window 10 years from now,” Bergh said at CNBC Evolve. “Everyone can do their own body scan on a camera.” When Bergh took over Levi Strauss in 2011, one of the things he was surprised to discover was the location of its innovation center: Turkey. In 2013, Levi Strauss opened its Eureka Innovation Lab located near its San Francisco headquarters. Bergh sees innovation as one of the three big business shifts he brought to the company, including a move to direct e-commerce and branded store sales, as well as a renewed focus on women’s clothing.
Crystal Financial Closes $60MM Credit Facility for Apparel Retailer True Religion
Crystal Financial LLC announced the closing of a $60,000,000 Senior Credit Facility for True Religion Apparel, Inc. Founded in 2002 and best known for its signature denim, the Company is a retailer and wholesaler of high-quality apparel and accessories for men, women and children. Proceeds from the transaction were used to refinance existing debt and will provide for ongoing working capital needs. “True Religion is a leading lifestyle brand that allows its customers to express their unique and individual style. As we enter into the next phase of the Company’s growth, it is critical to have access to capital from a creative and flexible financing partner,” said Michael Buckley, CEO of True Religion.
Ascena downgraded by S&P
S&P Global downgraded Ascena Retail Group’s credit rating deeper into junk territory based on what analysts saw as an “elevated risk” of the retailer pursuing a debt restructuring deal. An Ascena spokesperson said in a statement: “ascena remains in full compliance under its term loan and revolving credit facility, and intends to remain so. The company continues to consider options to optimize its balance sheet from a position of strength. We have large iconic brands and a business with significant liquidity.” The downgrade, to an issuer rating of CCC from CCC+, comes as Ascena “continues to post weak results and faces increasingly intense industry difficulties,” S&P analysts said in a press release emailed on Wednesday. S&P has a negative outlook on Ascena’s rating, indicating a risk for further downgrade on the likelihood that Ascena would cut a debt exchange deal at terms below its original issuance or buy back its own debt at prices below face value.
‘We will never go public,’ Aldo CEO says
The chief executive officer of The Aldo Group Inc. says he no plans to take the company public. “We will never go public,” David Bensadoun told BNN Bloomberg. “We’re a family-owned business and we enjoy being a privately-held company. Being on the public markets is not something we aspire to.” The comments come amid a tepid market for initial public offerings in Canada. Bensadoun, who has served as CEO of the shoe retailer since April 2017, offered some optimism when it comes to the Canadian retail landscape, saying this country is better protected from the retail “apocalypse” than the United States. He added Aldo is always looking for new stores but noted it is also hoping to “prune” its locations in the “over-stored” United States. Aldo, which was founded by Aldo Bensadoun in Montreal in 1972, now operates 3,000 stores in more than 100 countries.
Athletic & Sporting Goods
Vt. Ski Resort Announces Sale to Colorado Group
Another New England ski resort has announced a sale. Vermont’s Sugarbush Resort, one of the largest destinations for skiing and riding on the East Coast, will join the portfolio of Alterra Mountain Company out of Denver. Alterra is the group behind the Ikon Pass, which allows holders to visit multiple resorts, and which Sugarbush was already affiliated with. Alterra owns 14 destinations including Stratton in Vermont and Steamboat in Colorado.
Silofit Raises Seed Round to Develop “World’s First” Network of On-Demand Gyms
Silofit is a Montreal based startup that has created a network of private, on-demand fitness spaces through an app offering that allows users to reserve gym studios. The proptech startup leases small office spaces and turns them into private gym studios, allowing fitness trainers or individual gym-goers to book space by the hour through its app. The startup touts itself as the world’s first network of private fitness spaces.
Cosmetics & Pharmacy
Olaplex Sells to Advent International
Olaplex, the pioneer of the bond-building hair-care segment, has a new owner. The brand has sold the company to Advent International, a large private equity firm that backed European beauty retailer Douglas until 2015. Terms of the deal were not disclosed, but industry sources said Olaplex has more than $100 million in sales, and that the company is valued at around $1 billion. The deal closely follows another acquisition in the hair space. Last week, Henkel acquired DevaCurl, another hair business on track to do $100 million in sales for 2019. Hair continues to be the hottest but smallest category in U.S. prestige beauty, according to the latest numbers from The NPD Group. The category gained 17 percent in the third quarter, to $207.7 million.
Estée Lauder Companies to acquire K-Beauty company Dr. Jart+
The Estée Lauder Companies, Inc. is expanding its empire. The leading beauty manufacturer and marketer, whose portfolio already includes a number of name-brand skincare, makeup, fragrance and hair care brands, has announced the acquisition of Have & Be Co. Ltd. The deal is expected to close next month. A Seoul-based, global skin care company, Have & Be includes skincare label Dr. Jart+ and men’s grooming brand Do The Right Thing. Estée Lauder previously held a minority investment in the company. Its new acquisition of Have & Be is Estée Lauder’s first Asia-based beauty brand, and is expected to help strengthen the company’s reach in the Asian, North American and United Kingdom markets, as well in travel retail.
Discounters & Department Stores
Target ‘crushed it’ in Q3 as it beat estimates
Target’s third quarter sales rose 4.7% year over year in the third quarter to $18.7 billion, as comparable sales rose 4.5%, according to a company press release. The retailer’s gross margins expanded by more than one percentage point during the quarter, to 29.8%, and operating margin increased 0.8 percentage points. Operating income rose more than 22.3% to $1 billion, and Target’s net income rose 14.8% to $714 million. After the solid Q3 numbers, management raised its earnings estimates for the full fiscal year. Target beat the FactSet consensus estimate on sales, comps and profit, and the retailer’s stock spiked 8.8% in pre-market trading, according to MarketWatch.
Will Macy’s close more stores?
Macy’s on November 21st reported that third quarter net sales fell to $5.17 billion from $5.4 billion in the year-ago quarter. E-commerce failed to reach previous double-digit growth, hurt by work on the company’s website, the late arrival of cold weather and higher-than-expected delivery costs, executives said on a call with analysts. Comparable sales on an owned plus licensed basis fell 3.5%, according to a company press release. Stores in lower-tier malls were a 30-basis point drag on comps, CEO Jeff Gennette said in a conference call Thursday morning, also telling analysts that such locations are undergoing a close review. That evaluation will be done by the end of the year and the results presented at the company’s investor day in February, Gennette said.
Macy’s suffers another data breach
Macy’s on November 19th confirmed it had suffered a “highly sophisticated and targeted data security incident related to macys.com that affected a small number of customers during a one-week period in October,” according to an email to Retail Dive from a company spokesperson. The leaked information potentially includes customer first and last names, addresses, phone numbers, and payment card numbers, security codes and expiration dates, and didn’t affect mobile transactions, according to a notice with California attorney general. The Macy’s spokesperson didn’t immediately respond to Retail Dive’s question regarding how many customers were affected, but California law requires the notification of any breach that affects 500 people or more.
JC Penney CEO rolls out ‘sound’ strategies, but there’s only so much time to turn around sales
J.C. Penney doled out more detail about its plans to try to turn things around at the struggling department store chain. But the reality is in the numbers. And Penney’s sales are still falling, as the retailer continues to lose money. Penney only has so much time to try to win customers back, and to keep existing ones coming to its shops. It’s not as if shoppers don’t have plenty of places to choose from for their clothes, home furnishings and makeup today, including online. And traffic continues to drop off at America’s outdated shopping malls.
Emerging Consumer Companies
Warby Parker launches Scout, contact lens brand
Warby Parker, pioneer of direct-to-consumer brands, announced it will launch its first new brand in ten years – a line of daily contact lenses, called Scout. Consumers will be able to request a free trial that includes six days’ worth of daily contacts before opting in. A three-month supply will cost $110. Scout will be available both online and in the 112 brick-and-mortar Warby Parker locations.
Dia&Co. launches co-curation box
Dia&Co, the women’s plus-sized apparel brand, is launching a subscription box that involves control and curation. The “co-curation” box enables customers to select up to three of the five items included in the box from the company’s site. Thereafter, a stylist assesses what was already chosen, reviews the customer’s preferences and styles, and completes the box. Founded in 2015 and based in New York, Dia&Co has built a large and loyal audience and prioritizes community.
Ministry of Supply launches Great Auk Outfitters
Ministry of Supply, the Boston-based apparel brand known for opening the performance professional space, has launched Great Auk Outfitters. Great Auk Outfitters is introducing one product – a parka made completely without any animal products, including the commonly used goose down. The coat retails for $795 and is expected to compete with high-end brands such as Canada Goose. It will insulate to temperatures as low as -10° Fahrenheit, comparable to options from Canada Goose or North Face.
Grocery & Restaurants
Tilman Fertitta’s Landry’s LLC offers to buy Houlihan’s Restaurants for $40M
HRI Holding Corp., the parent company of casual-dining chain Houlihan’s Restaurants, has filed for Chapter 11 bankruptcy protection as part of an initial sales agreement to Tilman Fertitta’s Landry’s LLC for $40 million in cash. Houlihan’s parent company reported revenue of $202 million for fiscal 2019 with earnings of around $9 million.
Bumble Bee files for bankruptcy
Tuna maker Bumble Bee Foods said Thursday that it has filed for Chapter 11 bankruptcy protection, with an agreement from Taiwan-based FCF Fishery, its largest creditor, to purchase its assets for roughly $925 million. The bankruptcy proceedings are meant to reduce Bumble Bee’s debt burden caused by “recent and significant legal challenges” and help facilitate the sale. In 2017, the company pleaded guilty for price-fixing and was fined $25 million for forming a cartel with Chicken of the Sea and Starkist. In addition to its legal troubles, Bumble Bee is grappling with the declining popularity of packaged tuna.
Home & Road
Leon’s Furniture posts modest gains for Q3
Revenue for Canadian furniture retailer Leon’s Furniture grew by 1.5% to C$601.4 million for the period ended Sept. 30 compared with C$592.3 million in the third quarter of 2018, according to the company’s quarterly earnings report. Total system-wide sales were C$712.5 million in the 2019 third quarter compared with C$707.1 million in last year’s third quarter. Same-store corporate sales increased by 0.6% compared to the prior year’s third quarter. The adjusted diluted earnings per share grew 4.8% to C44 cents in September 2019 compared with C42 cents for the same period last year.
Richloom acquires domestic producer Chambers Fabrics
New York-based Richloom Fabrics Group will acquire, effective Dec. 1, the assets of Chambers Fabrics. Over the past six months, Richloom Fabrics has provided marketing assistance through a strategic partnership with Chambers Fabrics. Now, the partnership will be a financial one, with Richloom Fabrics producing product at the Chambers Fabrics’ High Point plant for its Fortress Clear, Richloom and outdoor Solarium brands. Chambers Fabrics’ founder and former owner Ray Chambers will remain at the facility through the acquisition as president of manufacturing and engineering, keeping his knowledge of weaving and product in house.
AkzoNobel breaks ground on $55M expansion in High Point
In a project that economic development officials say will be among the largest one-time capital investments here in the past five years, wood coatings specialist AkzoNobel broke ground Friday on a $55 million investment in its industrial coatings manufacturing site. Expected to be completed in 2021, the project is expected to strengthen the company’s position in wood coatings, which serves the furniture, building products and flooring market segment in addition to the company’s Chemcraft distributors. Chemcraft is the company’s specialist wood coatings brand that allows distributors and OEM customers the ability to match any color.
Jewelry & Luxury
Tiffany’s New Chief Brand Officer Is Former Barneys New York CEO
Daniella Vitale, who until recently served as chief executive officer at Barneys New York, will become Tiffany & Co.’s new executive vice president, chief brand officer, beginning Dec. 1. The chief brand officer position is a new one and represents an attempt to bring Tiffany’s marketing and merchandising functions under one roof. In her new role, Vitale will be responsible for overseeing and guiding Tiffany’s strategic merchandising and marketing initiatives. She will report to CEO Alessandro Bogliolo.
Luxury Brands Strive to Improve Messaging for Chinese Market
Luxury travel is a sector that defies borders. The trends shaping and changing travel at the luxury level seem to transcend cultures. Instead, they follow the habits of high-net-worth individuals who can opt to see the world in a way that’s possible only to the 1 percent. Despite their similarities, however, not all high-net worth individuals can be marketed to in the same way. Most notably, the Chinese market employs a unique set of digital platforms, making the context within which this segment receives brand messages very different than in the Americas and Europe.
Stein Mart Introduces Fine Jewelry
Stein Mart announced on November 18th that it has launched a fine jewelry department in 51 stores and online, as well as a key item fine jewelry program in all stores. This news follows the company’s announcement of its new Kids department. The fine jewelry collection, called “Stein Mart Jewel Box”, features diamonds, pearls, 14K gold, gemstones and designer branded jewelry with prices ranging from $200 to $5000. While currently available in select stores and online, the company plans to roll out the full assortment to more doors in 2020.
Office & Leisure
Staples, Office Depot in the Crosshairs of Amazon’s New ‘Smart Shelf’
Amazon is entering the business of letting businesses automatically reorder supplies. The e-tail giant is introducing Dash Smart Shelf, a scale upon which businesses can stack basic office supplies such as sticky notes, copy paper, and disposable cups. The shelf senses the weight of items and determines when inventory is running low. Participating brands include Hammermill, Bic, Keurig, and 3M, as well as the Amazon Basics and Amazon Commercial private label brands. Significantly, Amazon is directly entering turf already occupied by office supply giants Staples and Office Depot. Staples offers businesses an auto restock service, while Office Depot business customers have the option of a joining a supply subscription service. However, only Amazon is offering the ability to determine when reorders are needed based on smart inventory tracking – the other two services are based on timed deliveries.
Barnes & Noble Facing Lawsuit Over “Campaign of Age Discrimination,” Termination of Older Employees
A proposed class and collective action out of California alleges Barnes & Noble, Inc. has engaged in a “ruthless and unscrupulous purging” of employees who are age 40 or older in order to replace them with a younger workforce. The 16-page complaint begins by painting a picture of Barnes & Noble as a once-prosperous bookstore chain that, as the New York Times put it, “has been sliding toward oblivion for years.” In August 2019, however, Barnes & Noble’s fate seemed to take a turn when it was purchased by private equity hedge fund Elliott Management Corp., the suit states. Soon after the acquisition, the retailer found itself facing a “strategic makeover” led by newly appointed CEO Achilles “James” Daunt, who the case says is well-known for rescuing British book retailer Waterstones “out of a death spiral.” As part of an effort to be “fresh and exciting,” Barnes & Noble began a “campaign of age discrimination,” the case alleges, and discharged employees age 40 and older who “no longer looked the part.” According to the suit, the new corporate directive was to replace “book people” (which the case says was the defendant’s code for older workers) and hire “only sales people” – that is, younger employees.
U.K. Regulator to Examine Hasbro’s $4 Billion Entertainment One Deal
Britain’s Competition and Markets Authority (CMA) will examine toy giant Hasbro’s planned $4 billion acquisition of independent studio and Peppa Pig owner Entertainment One. The competition regulator, which had a big role in probing the sale of European pay TV giant Sky, said Thursday that it would look at whether the deal “may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.” Its examination will start on Friday. The deadline for the CMA to announce a potential so-called “Phase 2,” or more in-depth investigation, is Jan. 21. Hasbro unveiled the mega-deal this summer. The acquisition would hand Hasbro the U.K. stock market-listed Canadian studio and its hit kids series Peppa Pig and PJ Masks along with other properties, such as Nickelodeon’s Ricky Zoom.
Technology & Internet
PayPal plans to acquire Honey for $4 billion
PayPal Holdings Inc. will acquire Honey Science Corp. for about $4 billion, its largest-ever acquisition, adding a startup that amasses valuable data on consumer buying habits and doles out coupons for online bargains. About 17 million people use Honey apps or web browser extensions to find discounts at online shopping sites. The company’s services include a browser extension that automatically applies coupons at e-commerce sites. In a statement, PayPal said that Honey’s capabilities will give its customers a better shopping experience, and help merchants drive sales, partly with more timely and personalized offers.
Facebook takes on Venmo with new payments tool that can be used across its family of apps
Facebook is taking on PayPal’s Venmo with a new payments service that will soon be able to be used across its family of apps. In a blog post on Tuesday, the company said the new service, called Facebook Pay, will allow users to securely send payments to others. Facebook Pay accepts most major credit and debit cards, as well as PayPal. Facebook already allows users to send money through the Messenger app. But with Facebook Pay, users will be able to send money via other Facebook apps. To start, it’s rolling out on the core Facebook and Messenger apps, but will be added to Instagram and WhatsApp in the future.
Finance & Economy
U.S. leading indicators fall third straight month, adding more evidence of slowing economy
Economic growth in the U.S. has softened considerably since the end of the summer, according to an index that measures the nation’s economic health. What’s more, the index’s six-month growth turned negative for the first time since mid-2016. The decline last month stemmed mostly from higher applications for unemployment benefits, weaker orders for manufactured goods, and the number of hours employees work.
Strong Consumer Spending to Support Solid Holiday Season, Forecasters Said
Forecasters across the board are predicting a solid holiday shopping season with an uptick in sales ranging from 2 to 5 percentage points over the 2018 shopping season. However, analysts also warn that some curve balls might take a bit of cheer out of the season, which can make up 20 percent of a retailer’s annual sales, according to influential trade group the National Retail Federation. Because Thanksgiving falls on Nov. 28 this year, it effectively takes six shopping days out of the season.
