What a year. A crippling pandemic. Protests and riots. A bitterly fought election. At some point in 2020, so many things had gone wrong that it became a cliché (and even felt a little naive) to express optimism for 2021. But we are almost there, and now as newly approved COVID-19 vaccines begin to roll out, do we dare indulge in looking forward to the coming year? In this, our last Weekly Consensus and Big Story of 2020, what can we reasonably predict about 2021? With 2020’s barrage of bad surprises fresh in our minds, we might be tempted to shrug and say we can’t predict anything. But that is not true. When it comes to the consumer economy in 2021, we can make some educated, uncontroversial guesses. And it is ok to have some optimism.
First, there are certain dynamics in the economy about which we can make predictions with a high level of confidence because they are trends that were set in motion in 2020 that can’t easily reverse. One such dynamic, and one that could inspire some reasonable optimism, is housing. As Bloomberg columnist Conor Sen wrote last week, home prices are up roughly 10% year-over-year, driven by rising buyer demand, record low mortgage rates and tight supply. These conditions create a positive wealth effect and opportunity for homeowners to refinance or take out equity, bolstering consumer spending. Further, the economic multiplier of new homeowners who moved from crowded cities out to the suburbs in 2020 is likely to continue as renovations and nesting supports home-related expenditures. Another pandemic-era trend that is also likely to have implications for 2021 is pets. Adoptions surged in 2020, resulting in higher spending on pet food and supplies. While the rate of pet adoptions may decline as the pandemic fades in 2021, the greater number of pets means that the jump in spending on pet care is likely permanent.
Next, there are certain sectors about which we can make predictions with moderate confidence because we saw in 2020 how they were impacted by the spikes and lulls of the pandemic, giving us hints about how they will behave in 2021. Along these lines, assuming increasing availability of vaccines and a certain level of receptivity to being vaccinated among the public, it is reasonable to predict that in-restaurant dining will make a strong recovery in mid-2021. Through 2020, restaurants were able to attract patrons when local governments allowed it, suggesting demand will return again in 2021. Similarly, there appears to be pent up demand for travel, sporting events, and concerts. However, recovery in these areas may lag as we’ve come to see them as some of the riskiest activities of the pandemic and there may be hesitation to flock back to them.
Lastly, there are sectors and trends that are question marks. Predictions about certain things in 2021 are difficult because a return to normalcy is plausible, but so is the idea that people and businesses have learned new behaviors. For instance, will delivery apps such as DoorDash and GrubHub suffer setbacks in 2021 as in-restaurant dining recovers and fears of being out in public recede? Or will consumers continue using these apps after having become accustomed to the convenience? Similarly, what will happen to curbside pickup, working from home and Zoom calls? Could e-commerce (or at least the rate at which it is gaining on brick and mortar retail) slow? Could Amazon’s growth possibly slow? These questions are more difficult to answer.
Still, the broadest, most general prediction that we can make for 2021 is that it might unfold like 2020 in reverse, beginning with widespread pain and ending with a strong recovery. Certain sectors will lead and others will lag, and certain businesses that didn’t survive the pandemic may never come back. But 2021 is going to be better.
Thank you for reading The Weekly Consensus and The Big Story this year. In 2020, we explored, among many topics, the evolution of e-commerce, tariffs and China, the arms race between Amazon and Walmart, the future of malls, and intriguing new brands. But more often than anything else this year, we wrote about the pandemic and its consequences for the consumer economy. We look forward to publishing this newsletter for you again next year and are hopeful that in 2021 we will be able to share happier headlines and more genuinely good news.
Headline of the Week
Google Faces Antitrust Cases in the U.S. and Europe
Google now faces several antitrust challenges around the world, including three government lawsuits filed in the U.S. in the last two months alone. Government agencies have been scrutinizing the company for years, though, with the European Commission cracking down on the search giant well before U.S. regulators caught up. The Commission has already levied billions of dollars in fines against Google in three separate competition cases, which Google has appealed. Regulators in other countries have also taken issue with Google’s competitive practices, like in Australia, where top Google critic News Corp has a major presence. Google also faces a couple notable antitrust challenges from private complainants. Fortnite-maker Epic Games sued both Apple and Google separately for alleged anticompetitive practices, including charging “exorbitant” fees on sales through their mobile app markets. Online publishers Genius Media and The Nation filed a lawsuit Wednesday claiming Google hurt their businesses by suppressing advertising competition. They are seeking class action status. In every major case, Google has denied engaging in any anticompetitive conduct.
Apparel & Footwear
Christopher & Banks weighs strategic options, including bankruptcy
Women’s apparel seller Christopher & Banks has brought on strategic advisers to evaluate “available strategic alternatives” as its sales and liquidity remain under strain. In its latest quarterly report, the company, which runs about 450 stores, issued a “going concern” warning that it might not survive over the next 12 months. Christopher & Banks also indicated that bankruptcy is among the options it is considering, along with an out-of-court debt restructuring and a sale of the company. Mall-based apparel retailers have been among the hardest hit financially by the COVID-19 crisis. Christopher & Banks’ disclosure that it might not survive the crisis followed a third quarter that brought a sales decline of 22.6% year over year and saw a total loss of $10.8 million. That represented an improvement over the company’s second quarter, which brought a deeper sales decline and net loss. But Q3 fell short of the company’s own expectations, according to CEO Keri Jones, who joined the company in 2018 after previously serving as an executive at Dick’s Sporting Goods.
Shirtmaker Thomas Pink up for sale as Covid hits demand for formalwear
Luxury goods giant LVMH is understood to have hoisted a for-sale sign over Thomas Pink, a premium shirt brand, as demand for office wear tumbles through the Covid pandemic. Thomas Pink shops, websites and social media have been shut and its owner is seeking bidders for the brand. Potential purchasers have been approached to view financial information in a data-room opened last week. Thomas Pink, which was founded in 1984 by three Irish brothers – James, Peter and John Mullen – re-opened its Jermyn Street flagship when lockdown was lifted in June but it was closed again several weeks later. Its Madison Avenue New York store is also closed, along with branches at Heathrow’s terminals 2 and 5. One potential bidder said the sale did not include any stock, although there was a revenue stream from a venture with lingerie group Victoria’s Secret. “It’s just a brand purchase, really. Everything else has gone,” they said.
Rihanna’s lingerie brand, Savage X Fenty, is reportedly seeking to raise $100 million in funding in order to expand into athletic wear. According to The New York Times’ DealBook newsletter, the company has hired Goldman Sachs to raise the new round of funding, which may be used to expand in Europe and launch the new line of athletic clothing. The new round of funding could give Savage X Fenty a valuation of $1 billion, the Times reports. Savage X Fenty, which was founded by Rihanna in May 2018, has raised over $70 million to date, with backing from Marcy Venture Partners — Jay-Z’s venture capital firm — ACME Capital, TriplePoint Ventures, and Avenir Growth Capital. The brand generates roughly $150 million in revenue but is not profitable, according to the Times. The company’s soaring success is due in part to Rihanna’s celebrity, but the brand has also drawn praise for its attention to inclusivity. Savage X Fenty carries lingerie in sizes up to 3X and includes “nude” color options for its apparel in a wide range of shades.
Rue 21 in deal to retire debt, extend credit agreement
Rue 21 has a new capital structure as its looks to accelerate its digital transformation and also open new stores. The apparel retailer said that its strong financial position has enabled it to refinance its existing term loan, increase available liquidity and lower its cost of capital. Rue 21 amended its asset-based credit facility to increase availability to $155 million due 2025 led by Bank of America, N.A. The amendment includes an increase to the FILO loan through a joint partnership with Bank of America and Tiger Finance. As of Dec.16, total liquidity exceeds $100 million. Rue 21 said the new capital structure will allow it to accelerate strategic growth initiatives, including omnichannel enhancements to create more engaging customer experiences. In addition, the company said its reduced debt load signals its financial strength to vendor and landlord partners. Rue 21, which has nearly 700 stores in 45 states, recently opened three new stores with another 15 planned for next year.
Athletic & Sporting Goods
UK’s JD Sports agrees to buy Shoe Palace for $681M
JD Sports has bought California-based Shoe Palace for $681 million as the London-listed leisurewear retailer looks to expand its footprint in the US. This will be JD Sports’ second US acquisition. The company entered the market in 2018 with its $560 million purchase of apparel company The Finish Line. JD Sports opened a new flagship store in New York’s Times Square in October. The company’s other recent acquisitions include Livestock, a Canadian apparel company bought in July, and UK menswear company Pretty Green, which JD Sports bought for £400 million (around $535 million) in 2019. It is also looking to buy UK rival Footasylum, pending regulatory approval. The company will pay $325 million in cash and issue a 20% stake in its new US subsidiary, worth $356 million, to four brothers from the Mersho family, which founded Shoe Palace in 1993. The brothers will continue to operate the company, which runs 167 stores across the US, half of which are in California. Shoe Palace generated $435 million in revenue and a pre-tax profit of $52 million for the year ending Dec. 31, 2019.
Adidas’ Largest Shareholder Groupe Bruxelles Lambert Takes Majority Stake In Canyon Bicycles
German bicycle brand Canyon has sold a majority stake in its Koblenz-based business to Groupe Bruxelles Lambert (GBL), the largest shareholder in athletic shoe brand Adidas. This follows the termination of investment from U.S.-based TSG Consumer Partners earlier this year. TSG had been a minority investor since 2016 having come on board to help the consumer-direct brand launch in the U.S. market. Canyon Bicycles GmbH was formed in 2001 by 58-year-old Roman Arnold, and was the new company name for Rad-Sport Arnold, a large bike shop in Koblenz founded in 1985 as RTI Sports, a distributor of Italian road-bike parts. Rad-Sport Arnold sold an own-label bike line called Radical, the name of which was changed to Canyon in 1996. The company started designing its own Asia-made bikes in 1998. In the past seven years, Canyon’s average growth has been 25% per year. In fiscal year 2020, growth was over 30% with sales of €400 million.
Football gear maker files for bankruptcy after losing patent-infringement suit
The phrase “bet-the-company litigation” is an overused metaphor to describe high-stakes cases. But once in a while the survival of a business is hanging in the balance, as in the case of Schutt Sports Inc. The Illinois-based maker of football helmets and other sports gear filed for bankruptcy on Labor Day, a month after it was sacked with more than $29 million in damages for violating its rival’s helmet patent. Schutt Sports said in bankruptcy court papers that the verdict was the final hammer, as the company already was struggling with deteriorating revenue and profit margins and an overleveraged balance sheet prior to the jury decision. A Wisconsin jury last month found that Schutt’s DNA and ION helmets, introduced in 2004 and 2007, respectively, infringed on Riddell’s patents aimed at reducing concussions. The jury ruled that Riddell was entitled to about five years of lost profits and royalties.
Cosmetics & Pharmacy
Rite Aid’s strong Q3 sees revenue growth, increased market share
Rite Aid’s fiscal third-quarter showed double-digit gains in revenue, as well as growing market share in both the front end and pharmacy. The Camp Hill, Pa.-based retailer reported revenue of $6.12 billion, up 12% year over year, with net income of $4.3 million, compared with $52.3 million a year ago. Rite Aid attributed this to a $55.7 million gain on debt retirements in the prior-year period, as well as a decrease in adjusted EBITDA, which were offset by lower restructuring costs and a higher gain on sale of assets related to the sale-leaseback of its Perryman, Md., distribution center. “We are pleased with our third-quarter performance as we continue to grow our business and achieve major physical and digital milestones through our RxEvolution strategy,” said Heyward Donigan, president and chief executive officer, Rite Aid.
Barbershop Software Squire Raises a Series C at $250 Million Valuation
Squire, a startup that sells software to barbershops closed a $59 million Series C funding bringing the total raised this year to $93 million. Founded in 2015, Squire Technologies launched in 2016 as a platform that helps barbershops run their business. The software has the capability to serve independent professionals, stand-alone locations, and multi-location franchises, with tools such as Point of Sale, Scheduling, Payroll, CRM, and a host of other features. Squire has offices in New York City and Buffalo, NY, and maintains operations in 35 major cities across the United States, Canada, and the United Kingdom. The business plans to expand into new markets, including Australia, Canada and the U.K. The majority of capital raised in this round will go toward making sales and marketing hires. The raise is $45 million in equity capital and $15 million in debt financing, bringing the total raised to date to $105 million. This round values the business at $250 million. The round was led by Iconiq Capital with participation from Tiger Global, Charles River Ventures, Trinity Ventures, New General Market Ventures, and SoftBank Opportunity Fund. Also backing this round are celebrity and strategic investors Stephen Curry, Trevor Noah, Quincy Jones, Tooey Courtemanche, Ara Mahdessian, Vahe Kuzoyan, and Pharrell Williams.
Millennial Supplement Brand LemonBox Lands $2.5 Million in Funding
LemonBox, the supplement company selling American-style supplements to Chinese millennials, completed a pre-A round of $2.5 million led by Panda Capital and followed by Y Combinator. LemonBox was founded in 2018 by Derek Weng to sell American health supplements to Chinese millennials like himself via online channels. LemonBox designed a WeChat-based lite app where users receive product recommendations after taking a questionnaire about their health conditions. The company customizes users’ needs by offering daily packs of various supplements. The capital will be used to open a second fulfillment center in the Shenzhen free-trade zone as a follow-up to its Silicon Valley-based one to provide more stability to its supply chain. Investment will also be made to secure health-related certificates and adding Japan to its sourcing regions.
Attn: Grace Secures Pre-Seed Funding and Strategic Collaboration with AARP Innovation Labs
Attn: Grace, the first subscription-based, sustainable wellness brand for women as they age, secured an additional round of $900,000 in pre-seed funding. Attn: Grace was co-founded by Mia Abbruzzese and Alexandra Fennell in June 2020 to destigmatize female aging and bring innovation to the $9.5 billion market for disposable incontinence products by offering discreet, convenient, subscription-based bladder-leakage products. The company launched a collection of sustainably sourced and designed liners, pads, and briefs to a 10,000-person waiting list this summer. The capital will enable Attn: Grace to meet high demand, expand its product offering, scale the business, and build its growing team.
Healthy Food and Beauty E-commerce Platform Kazidomi Raises 6M Euros
Healthy food and beauty e-commerce platform Kazidomi has raised 6 million euros in a funding round led by Invest for Jobs and FJ Labs. The business is based on a subscription model, with annual members benefiting from preferential prices, substantially less than at traditional supermarkets. Kazidomi — which is primarily operational in France and Belgium today but delivers to 15 different countries — retails a curated selection of products: food, hygiene, wellbeing and home-care from numerous brands, including an eponymous label. The more than 3,500 products carried on the platform are validated by health experts and delivered to people’s homes. Beauty categories represented are hair, lip care, makeup, skin care, fragrance and men. There’s also body care and health, with supplements and aromatherapy included. Kazidomi has tripled its sales annually over the past four years. It has more than 20,000 members and is expanding to Holland and Germany. The company will use part of its funds to reinforce its product catalogue, including in the wellbeing space, and its private-label line, which already has 170 stockkeeping units, making up 5 percent of the portfolio.
Discounters & Department Stores
Walmart enlists top TikTok creators for first-of-its-kind shoppable livestream
Walmart will run a first-of-its-kind shoppable livestream on TikTok in the U.S., part of the retailer’s holiday marketing, the company announced via blog post. On Dec. 18, 10 of TikTok’s top creators will participate in a one-hour variety show program called the “Holiday Shop-Along Spectacular.” Social media personalities, including Michael Le — who has attracted over 43 million followers on the app through his dance videos — will showcase both private-label and national brands at Walmart, with an emphasis on apparel.
Kohl’s, Dillard’s, Nordstrom Prove Cutting Inventory Can Boost Working Capital, But For How Long?
With three weeks until the end of the year, retailers and brands are focused on their balance sheet, and it’s all about finding working capital to survive. Cutting inventory now – possibly in half – can bring retailers closer. However, determining which items to cut is a fool’s errand when done blindly, or worse, using historical data that doesn’t reflect the fluidity of changing consumer preferences right now. To top things off, returns are also going to come in hot and heavy in January, particularly because online sales (which have ballooned during the pandemic) tend to have higher return rates than in-store purchases. Forecasts for holiday purchases made online will soar to $234.9 billion in the US this year according to one estimate, which also predicts as much as $70.5 billion could be returned.
Michelle Gass on Emerging Stronger at Kohl’s
Kohl’s Corp.’s Michelle Gass is taking a glass-half-full approach to retail today. While the chief executive officer acknowledged the pain of the pandemic, pointing to “an incredibly dynamic and challenging year,” she also sees more than a fair measure of hope ahead. “We’ve really been challenged to better understand where the consumer’s headed, to adapt and meet them there,” Gass said. “The next several months and even years ahead provide a significant opportunity for all retailers.” At Kohl’s, which Gass described as a purpose-driven company, she plans to make the most of that opportunity by keeping the consumer at the center of all it does.
“We work hard every day to drive innovation and new thinking to deliver against our customer’s ideal experience,” she said.
Walmart to take middle-mile trucks driverless in Arkansas
Walmart has reached a milestone in its self-driving pilot with Gatik. The retailer announced Tuesday its multi-temperature Autonomous Box Trucks will go fully driverless along a two-mile test route in Bentonville, Arkansas, in early 2021. The companies also announced an expansion of their operation to a second pilot program along a longer, 20-mile route in Metairie, Louisiana, between a supercenter and a Walmart pickup point. Walmart’s move to driverless with Gatik will test the full potential of middle-mile autonomous delivery while the second test route will assess the technology’s capabilities over long distances.
Emerging Consumer Companies
Grove Collaborative raises $125 million
Grove Collaborative, San Francisco-based marketplace for natural home and personal care products, has raised $125 million. The round valued the company at $1.3 billion and was led by Counterpoint Global at Morgan Stanley, Sculptor Capital, Nextview Ventures, and Glynn Capital. The company has built a platform for eco-friendly home and beauty products that sells products from other brands (like Method and Mrs. Meyer’s), its own products, and products that the company creates through collaborations such as a recently released line of soaps, cleaners, kitchenware and more with TV personality and interior designer Jeremiah Brent.
StockX Raises $275M Series E Funding
StockX, the Detroit-based online market for sneakers, apparel, electronics, accessories, and collectibles, raised $275 million. Led by Tiger Global with new participation from Altimeter Capital, Sands Capital, and Whale Rock Capital Management, the raise brings the total funds raised to $490 million, and values the live marketplace at $2.8 billion post-money. The new investment will be used to accelerate global expansion, innovation and category diversification for the e-commerce marketplace. In the third quarter, StockX achieved breakeven and surpassed $3 billion in lifetime gross merchandise value (GMV). During 2020, StockX’s year-over-year revenue growth has accelerated, reaching over 75% in Q3 on over $100 million in quarterly GAAP revenue.
BARK, pet brand behind BarkBox, to go public via a SPAC
BARK intends to go public through the SPAC Northern Star Acquisition Corp. The deal is expected to close in the second quarter of 2021 with the new company trading under the symbol BARK on the NYSE. The company serves over one million dogs monthly, and uses an omnichannel sales strategy with its BarkBox subscription program and large retail partnerships for proprietary products, including Amazon.com, Target, Petco, PetSmart and Costco. The company’s products are found in over 23,000 stores. It is projecting revenues of approximately $365 million for fiscal year ending March 31, 2021. The transaction values BARK at an enterprise value of approximately $1.6 billion and is expected to provide up to $454 million of gross cash proceeds to invest in new and existing product lines and international expansion.
TZP Group announced a strategic investment and partnership with Feel The World, Inc., dba Xero Shoes. Launched in 2009 by Lena Phoenix and Steven Sashen, Xero product range includes casual and performance shoes, boots and sandals. Marc Schneider, a senior advisor to TZP Group, with over 35 years of industry experience, including most recently serving as CEO of Kenneth Cole Productions, has also made a direct investment in Xero and will be joining the Board of Directors. Steven Sashen, CEO and co-founder, shared “After years of bootstrapping Xero Shoes’ growth, Lena and I are thrilled to have a partner that shares our vision and has the resources to help us become a global brand that helps more people experience the comfort and benefits of our footwear.”
Grocery & Restaurants
Plant-based concept By Chloe files Chapter 11 bankruptcy
Blaming the COVID pandemic, the 14-unit plant-based concept By Chloe filed Chapter 11 bankruptcy last week and CEO Jimmy Haber stepped down. New York-based parent company BC Hospitality Group Inc. also said it has put the chain up for sale as part of the bankruptcy proceeding. It has also obtained debtor-in-possession financing to continue operations from existing investors that includes Bain Capital Double Impact Fund LP, QOOT International, Kitchen Fund and Lion Capital. The company is seeking an auction by mid-February 2021. While the company searches for a new CEO, Catey Mark Meyers, who is chief of staff, will serve as CEO in the interim. The bankruptcy comes after years of legal wrangling over the plant-based chain, which was founded in 2015 by Chloe Coscarelli as a vegan concept featuring house-made burgers, sandwiches, pastas, cold-pressed juices and baked sweets.
FAT Brands agrees to merge with Fog Cutter Capital
FAT Brands Inc., parent to Johnny Rockets, Fatburger and other restaurant brands, has agreed to merge with controlling stockholder Fog Cutter Capital Group Inc., the company said. Beverly Hills, Calif.-based FAT Brands’ stock rose more than 20% to about $7.50 a share at mid-morning after the announcement. “The merger is intended to provide FAT Brands with increased financial flexibility and simplified corporate structure, at a time in the restaurant industry when committed capital and first mover advantage are critical to strategic acquisitions,” the company said in a statement. Andy Wiederhorn, who serves as FAT Brands president and CEO and founded Fog Cutter Capital, said in a statement, “We have taken a number of steps in 2020 to bolster our balance sheet and ensure that FAT Brands is as nimble and opportunistic as possible, especially in this environment.” Wiederhorn said the merger would give the company financial flexibility. FAT Brands, with nine restaurant brands, franchises more than 675 units globally.
Norwest Equity Partners buys Red Monkey from private equity peer
Investment firm Norwest Equity Partners (NEP) has acquired Red Monkey Foods from San Francisco Equity Partners. Founded in 2002, Red Monkey is a provider of private label organic spices and seasonings, as well as gourmet salts. In addition, the company manages two salt brands, San Francisco Salt Company and Epsoak. Red Monkey, which also supplies bath salts, operates out of a number of facilities in Springfield, Missouri. “Red Monkey continues to deliver strong sales growth and provides a compelling value proposition to customers and consumers,” said NEP partner, Sundip Murthy. “The NEP team is excited to partner with management to further build the business into an even stronger and diversified, industry-leading company.” Scott Bolonda, Red Monkey Foods CEO, added: “We were attracted to NEP from the onset due to their partnership approach and appetite to help accelerate building our business together. We continue to see strong growth in our space and look forward to capitalising on the compelling trends with the resources of our new partner.” The financial terms of the transaction have not been disclosed.
Brentwood Associates buys a stake in breakfast-focused chain Snooze
Private-equity firm Brentwood Associates has purchased a minority stake in Snooze, a casual-dining breakfast chain based in Denver with 44 restaurants in Arizona, California, Colorado, North Carolina, Missouri and Texas. Terms of the transaction were not disclosed, but the chain has added Brentwood partner Rahul Aggarwal to its board of directors. Private equity firms Stripes and Alliance Consumer Growth are already investors in the chain. Snooze is known for its friendly, upbeat vibe, culinary creativity and cocktail program, among other innovations in the breakfast segment.
Opes Acquisition Corp shareholders agree to buy BurgerFi International
Publicly traded Opes Acquisition Corp said its proposed purchase of BurgerFi International LLC has been approved by its shareholders and that the Miami-based firm, which was established as a blank check company to acquire other companies, will be renamed BurgeFi International Inc. and trade on the Nasdaq stock market as BFI starting Dec. 17. The transaction is valued at around $100 million, Opes said. This is the last stage in the merger, which was announced in June. BurgerFi, based in North Palm Beach, Fla., has a total of 125 company-owned and franchised restaurants. It is a fast-casual “better burger” concept that prides itself on its burgers made from Angus beef that hasn’t been treated with hormones or antibiotics, its certified humane chicken that also hasn’t been treated with antibiotics (no chickens are treated with hormones), its house-made fries and its frozen custard.
Home & Road
Bed Bath sells Cost Plus World Market
Bed Bath & Beyond Inc. has sold Cost Plus World Market to Kingswood Capital Management, a Los Angeles-based private equity firm, for an undisclosed amount. The purchase agreement includes 243 brick-and-mortar locations, Cost Plus World Market’s digital business, two distribution facilities and a corporate office located in Alameda, Calif. Cost Plus World Market was Bed Bath’s last non-core banner brand, which it acquired in 2012. Cost Plus World Market is expected to continue to operate as a standalone business, Bed Bath said in a statement. The deal is expected to close prior to Bed Bath & Beyond’s fiscal year end in February 2021, and is subject to customary closing conditions, including, among others, the expiration or termination of the applicable waiting period under the Hart-Scott Rodino Antitrust Improvements Act. Both companies have agreed to a transition service agreement following the close of the transaction to help ensure business continuity. In addition, Bed Bath approved a new $150 million accelerated share repurchase program (ASR), subject to market conditions, which will be in addition to the $225 million ASR announced on Oct. 28, it said.
Furniture sales continue year-over-year rise in November
Falling slightly below October levels, furniture sales continued its year-over-year climb in November, up for the month for the fourth month in a row. Bringing in a total of $10.3 billion this month according to advance estimates from the Department of Commerce’s monthly report on retail sales, furniture and home furnishings store sales were down 1.1% from October’s adjusted $10.4 billion total, not changed from last month’s report, and up 3.6% from November 2019. For the three month period of September-November, totals were up 10.3% year-over-year and down 0.8% when compared with June-August of this year. The slight dip in furniture and home furnishings sales in November from October could be attributed to consumer holiday shopping trends. Normally taking place during the day of and week around November’s Black Friday retail holiday, research has indicated that many people opted not to shop traditional retail holidays this year out of concern over coronavirus safety in crowded stores, and many retailers obliged those concerns by elongating holiday sales into the months before and after those holidays.
Jewelry & Luxury
How COVID-19 Changed The Way Engaged Couples Shop
Wedding planning site The Knot has released the 2020 edition of its annual Jewelry and Engagement Study, which tracks trends in consumer behavior and wedding jewelry by polling thousands of recently betrothed couples. And, unsurprisingly, the biggest factor in couples’ planning and ring shopping decisions in 2020 was the COVID-19 pandemic. The pandemic played a major role in couples’ decision-making, from setting the date and choosing a venue to inviting guests and figuring out how and when to shop for wedding jewelry.
De Beers, Botswana Extend Sales Agreement by a Year
De Beers and the government of Botswana have extended their current sales contract by one year. The current agreement was due to expire at the end of 2020. It will now expire at the end of 2021. The decision was made because of “the logistical challenges presented by the [COVID-19] pandemic,” said a De Beers statement. “The extension, which will extend the terms of the existing agreement, will provide further time for discussions regarding the contract renewal.”
New Synthetic Diamond Growing Method Not Meant for Jewelry
Scientists at the Australian National University (ANU) and RMIT University, also in Australia, recently sparked worldwide news coverage when they created two synthetic diamonds with a new method that uses a large amount of pressure rather than heat. One of the diamonds created is “the kind found on an engagement ring,” according to an ANU statement, while the other is a Lonsdaleite, a type of diamond found at the site of meteorite impacts.
Customs Seizes Hundreds of Fake Jewelry Pieces, Watches
On Dec. 11, U.S. Customs and Border Protection (CBP) officers in Cincinnati seized two shipments that contained hundreds of fake jewelry pieces and watches. The first shipment originated in Shenzhen, China, and was headed to a private residence in Norcross, Ga. The package held a declared value of $315. It held 171 items of jewelry or watches purporting to be from Versace, Michael Kors, Cartier, Salvatore Ferragamo, Dior, Tiffany & Co., Bulgari, Armani, Hugo Boss, Burberry, Hublot, Patek Philippe, Audemars Piguet, Louis Vuitton, Fossil, Omega, and Rolex. If the pieces had been genuine, their total manufacturer’s suggested retail price (MSRP) would have been $8,419,017.
Office & Leisure
Electronic Arts outbids Take-Two with $1.2 billion deal for Codemasters
Video games maker Electronic Arts said on Monday it had reached an agreement to buy Codemasters in a deal worth $1.2 billion, trumping an earlier agreement between the British company and rival Take-Two Interactive Software. UK-based Codemasters, known for its Formula One games for Playstation 4, said it considered the new offer to be superior to Take-Two’s cash-and-stock buyout offer. Take-Two said it was considering its position. California-based EA, as well as rivals Activision Blizzard Inc and Take-Two, have benefited from a surge in videogame sales in the United States fueled by the trend of people spending more time indoors due to the COVID-19 pandemic. But that trend could reverse next year as countries begin vaccinating people against COVID-19. “With the full leverage of EA’s technology, platform expertise, and global reach, this combination will allow us to grow our existing franchises and deliver more industry-defining racing experiences,” EA Chief Executive Officer Andrew Wilson said.
Court approves Guitar Center exit from bankruptcy
Guitar Center is one step closer to exiting bankruptcy after the largest U.S. retailer of music instruments and equipment clinched court confirmation of its Chapter 11 plan. At a virtual hearing Thursday, Judge Kevin Huennekens confirmed Guitar Center’s amended bankruptcy plan. The retailer expects to emerge from the Chapter 11 process as soon as next week, attorneys for the company said. The chain will cut about $800 million of debt in the restructuring, court records show. Guitar Center filed for bankruptcy in November after the pandemic kept customers at home and consumers cut back on discretionary purchases amid the recession. The chain has about 300 stores across the U.S., and sister brands include Music & Arts, which has more than 200 locations specializing in band and orchestral instruments. During the hearing, Huennekens called the deal “in the best interest of all creditors” and other parties, and added that the creditors would be paid in full.
An existential moment for the last video store chain
For the past decade, Family Video didn’t get the memo about the death of the video store. Hollywood Video was bought by Movie Gallery and both were forced to liquidate in bankruptcy in 2010. Blockbuster also went bust that year and today has but one lone, anachronistic store remaining under its name. Yet Family Video, based largely in the Midwest, opened new stores during some of the years following the big chain wind downs. In 2018, it had more stores open than the Sears brand or Barnes & Noble. The chain had started shrinking since then as consumer shifts in content consumption caught up with it. Still, Family Video went into 2020 with more than 500 stores. It will end the year with about half that footprint. But it wasn’t just the depression of foot traffic and uptick in streaming-from-home that forced Family Video to permanently close roughly half its footprint. COVID-19’s impact on Hollywood left a dearth of quality titles to entice customers into the stores.
Technology & Internet
Poshmark releases S-1 for IPO and shows profits
Online clothing reseller Poshmark filed its IPO prospectus on Thursday, after racking up over $30 million in profit over the past two quarters. Poshmark, founded in 2011, is an internet marketplace for second-hand clothing, shoes and accessories. Like eBay, Poshmark connects buyers with sellers, who often list items from their own closet. The company makes money by taking a cut of each transaction. Revenue at Poshmark increased 28% in the first three quarters of 2020 to $192.8 million, from $150.5 million the same period last year. It swung to a profit of $20.9 million over that stretch, after losing $33.9 million a year ago. Gross merchandise volume, a key metric measuring total dollar value of merchandise sold online, was negatively impacted in the first quarter because of the coronavirus pandemic. It increased just 9% in the first three months of the year, but rebounded to 42% growth in the second quarter as buyer and seller activity resumed. The company also cited its growing base of active buyers, which doubled in June from two years ago. Poshmark said it now counts 6.2 million active buyers and 31.7 million active users, the majority of which are female and are either millennials or Gen Z.
Wish raises $1.1 billion for IPO
Online retailer Wish has priced its initial public offering at the top end of a marketed range, raising $1.1 billion and further elevating the year’s already record tally for U.S. listings. Wish is valued in the listing at about $17 billion on a fully diluted basis, which includes options and restricted stock units as well as the outstanding shares listed in its filings. The origins of Wish, officially known as ContextLogic Inc., go back to 2010, when the company’s co-founders started an online advertising company. When that failed to take off, they hit on another idea: inviting Chinese merchants to sell cheap products directly to U.S. buyers. The timing was propitious because the community of sellers supplying ecommerce giant Alibaba Group Holding Ltd. were now looking for opportunities abroad. The company was renamed Wish.com and in late 2012 began hiring Chinese staff to recruit sellers and handle customer service.
Finance & Economy
U.S. retail sales decrease more than expected in November
U.S. retail sales fell for a second straight month in November, likely weighed down by raging new COVID-19 infections and decreasing household income, adding to growing signs of a slowdown in the economy’s recovery from the pandemic recession. Retail sales dropped 1.1% last month, the Commerce Department said. Data for October was revised down to show sales falling 0.1% instead of climbing 0.3% as previously reported. October’s decrease was the first since April, when stringent measures to control the first wave of coronavirus cases crippled the economy. Data this month showed the economy, which plunged into recession in February, added the fewest jobs in six months in November. The number of people filing new claims for unemployment benefits jumped to a near three-month high in the first week of December.
Early Shoppers Skew Holiday Sales But Trends Stay Positive
In a season when holiday shopping began early, November retail sales dipped from the month before but still enjoyed a sixth consecutive year-over-year gain, according to the National Retail Federation. The United States Census Bureau announced that overall retail sales in November declined 1.1% seasonally adjusted from October but gained 4.1% year-over-year. NRF’s retail sales calculation, which excludes automobile dealers, gasoline stations and restaurants and focuses on core retail, had November down 0.3% seasonally adjusted from October but up 8.8% unadjusted year-over-year. Earlier this year, NRF forecasted that 2020 holiday sales would increase between 3.6% and 5.2% to a total between $755.3 billion and $766.7 billion from the 2019 results. Although it defines the holiday season as November 1 through December 31, NRF research indicated that 42% of consumers started holiday shopping sooner than usual this year. On average, consumers had about half their holiday shopping left to do by Thanksgiving weekend.
