While the Beauty and Personal Care category has been among the strongest subsectors of Consumer over the last several years, it wasn’t immune to the woes of 2023. Last year, the two-headed monster of high inflation and high interest rates cast a gloom over the entire Consumer landscape (and the greater U.S. economy), as shoppers grappled with higher prices across most categories of products and services. Investors also reacted and were more hesitant to deploy capital as borrowing costs and uncertainty increased. These factors resulted in an 19% increase year-over-year in total U.S. business bankruptcies in 2023, including a 72% surge in Chapter 11 reorganization filings, according to data provider Epiq AACER. However, just as 2023 came to a close, there were a few reminders of the underlying strength of Beauty – despite some companies’ unhappy outcomes, the category is far from only doom and gloom.
Several distressed sales in Beauty and Personal Care captured headlines in 2023, throwing cold water on the category’s last few years of momentum. These included Farfetch’s announcement that it would look to sell high-end digital beauty retailer Violet Grey after only two years of ownership; the Chapter 11 filing and ensuing sale of Hello Bello, the baby care brand founded by celebrities Kristen Bell and Dax Shephard; Unilever’s announced desire to divest former direct-to-consumer (DTC) darling Dollar Shave Club; and the struggles and eventual sale of inclusive makeup brand Uoma. But perhaps the most troubling of such stories in 2023 was the Chapter 11 of biotech-beauty pioneer Amyris and the resulting fire sale of its portfolio of brands, including its squalane-based flagship brand Biossance, supermodel Rosie Huntington-Whitely’s makeup brand Rose Inc., Naomi Watts’s menopause-care brand Stripes, and Queer Eye star Jonathan Van Ness’s JVN Hair.
However, just before Christmas, two large deals were announced for healthy Beauty and Personal Care brands that served as a reminder that there are still strong, successful winners in the category, and strategics are still acquisitive when given an opportunity to snatch them up. On December 22nd, Unilever announced it will acquire haircare brand K18. K18’s six-SKU product line uses a proprietary molecule to repair damaged hair, and 2023 sales were over $100 million. On the same day, Shiseido announced it acquired Dr. Dennis Gross Skincare for $450 million. Best known for peel pads and masks, Dr. Dennis Gross 2023 projected sales were also over $100 million, implying a 3.6x-4.5x EV/sales multiple.
These acquisitions underscored generally resilient industry-level data that has continued for Beauty and Personal care this year. Research and analytics group Circana (formerly NPD Group and IRI) reported in November that sales through the first three quarters of the year continued to surge in Beauty, especially in Prestige and in the makeup, haircare, and skincare categories. According to Circana, year-over-year growth in these Prestige categories well outstripped inflation in the first nine months of the year, growing 16%, 14% and 14%, respectively. Growth was still strong, though not quite as robust across categories in Mass and in the fragrance category. Industry observers point to the “lipstick effect” or the idea that consumers continue to spend on low-price indulgences, such as beauty products, in times of economic distress, even as they pull back on larger ticket purchases.
The headwinds of 2023 haven’t been cured by the recent flip of the calendar to 2024, and the stories of distress last year have put a damper on the enthusiasm around most categories in Consumer, including Beauty. Still, the K18 and Dr. Dennis Gross deals of last month and continuing strong macro data pose a warning: don’t throw out the baby with the micellar cleansing bathwater.
Apparel & Footwear
Alpargatas S.A., the Brazilian footwear company behind Havaianas, named Liel Miranda as its next CEO late last month. According to the company, Miranda will assume the role on Feb. 1 and will succeed interim CEO Luiz Fernando Edmond, who will continue to serve as a member of Alpargatas’ board of directors after the transition. As CEO, Miranda will play a key role in the transformation process that began in 2023, Alpargatas said in a press release. The company added that he’s set to focus on simplification and efficiency, as well as leading the company in executing its new strategies, combining the resumption of sustainable growth with operational excellence. Miranda joins Alpargatas from snack food company Mondelēz International, where he served as president of the company’s Brazilian business unit since 2019. The executive joins at a time when the company is seeking to transform its business amid lagging sales. In November, Alpargatas reported net sales dipped 17.8 percent in the third quarter to 896.2 million Brazilian Real (182.22 million), down from 1.089 billion Brazilian Real ($220 million) the same quarter last year. Established in 1907, Alpargatas S.A is one of the largest Brazilian companies in the footwear business.
One of Bracken Darrell’s first stops as CEO of the company that owns Vans was a visit to the son of its co-founder. Darrell inspected the memorabilia in the office of Steve Van Doren, who is the brand’s ambassador, including photos of Warped Tour, a music festival Vans used to sponsor that helped burnish its counterculture status. Since the company stopped sponsoring the tour and similar events, it has lost more young people than any other age group. Darrell thought he had hit on a clue to help answer how the shoe brand lost its cool. It is a question a lot of people are asking about the Southern California company, which is dragging down owner VF after years of being its engine of growth. The 60-year-old Darrell, who joined VF in July, is trying to resuscitate the $11.6 billion owner of brands that also include the North Face and Timberland. He doesn’t have much time. Activist investors are urging him to cut costs and jettison brands. Key to fixing VF is turning around Vans, which is its largest brand and accounts for nearly a third of total revenue.
International brands could be taking over the wardrobes of Americans as soon as next year. Spanish retailer Mango plans to open approximately 40 stores in the U.S., with the goal of making the U.S. one of its top five markets. Value-based retailer Primark has been expanding its U.S. presence in recent years, but in 2024, it is setting its eyes on opening stores in the southern part of the country. And, Italian lingerie and loungewear brand Intimissimi said that it plans to have 100 stores in the U.S. by 2024. After scaling back its U.S. expansion in 2015 due to low demand for its merchandise, Uniqlo is restarting its North American ambitions with plans to open 20 new stores in the U.S. and Canada in 2024. As local retailers struggle with slow consumer spending on their own turf, apparel retailers from overseas are looking to open shop. Although American shoppers are pulling back spending on discretionary items like apparel, the U.S. still continues to be an attractive market for international brands looking to scale their businesses. By 2024, more international apparel brands could be taking up spaces in malls and shopping centers across the U.S.
With no other suitors coming forward, Chico’s FAS has been acquired by private equity firm Sycamore Partners, per an announcement Friday that the deal has closed. In September, the companies said Sycamore would buy the apparel group — which includes Chico’s, White House Black Market and intimates brand Soma — for $1 billion unless a better offer materialized during a 30-day “go shop” period. Also on Friday, Sycamore said that the Chico’s brands have joined its KnitWell Group, a holding company formed last year that also includes Ann Taylor, Loft and Talbots and provides services to plus-size specialty retailer Lane Bryant. With Chico’s brands on board, KnitWell is now an enterprise with $6 billion in annual sales. Combining the brands into one operation allows them to share best practices and innovations and provides opportunities for efficiencies, KnitWell CEO Lizanne Kindler said in a statement. Chico’s FAS CEO Molly Langenstein is staying on, and in a statement Friday called the acquisition an “important milestone” for the brands. When the Sycamore deal was first announced, B. Riley analysts called Langenstein “essential to Chico’s continued success.”
Athletic & Sporting Goods
Hyperice filed a lawsuit in federal court against Therabody, the maker of the Theragun line of percussive massage guns, alleging infringement of the company’s patented percussion massage technology. In the lawsuit, Hyperice asserted its recently-issued U.S. Patent No. 11,857,482, which claims technology dating back to 2013. In 2018, Hyperice launched the Hypervolt, a massage gun featuring a brushless motor system, variable speed settings and QuietGlide technology. In the lawsuit, Hyperice contends that numerous Therabody products infringe on the patent, including Theragun Elite, Theragun PRO, Theragun Prime, Theragun Mini, Theragun Sense, and TheraFace Pro. Hyperice reported it would file additional lawsuits against other companies believed to have infringed on the patent in the coming weeks.
Shares in JD Sports Fashion slumped as the sportswear retailer slashed its guidance, in another sign of a slump in the global sportswear market following Nike’s warning of a drop in consumer spending last month. JD Sports Fashion JD, has cut its profit guidance, citing weaker-than-expected sales during its peak trading period. The Manchester-headquartered retailer on Thursday said sales in the peak 22-week period ending Dec. 30 fell behind its expectations, in a trading update. The FTSE 100 company blamed mild September weather and “cautious consumer spending” for its softer-than-expected sales as it slashed its pre-tax profit guidance for the full-year ending on Feb. 3 from £1.04 billion ($1.3 billion) to between £915 million and £935 million. JD Sports said higher spending on promotional activities, in the face of a slowdown in consumer spending, would see it achieve lower profit margins compared to last year.
Clarus Corp. entered into a definitive purchase and sale agreement to sell its Precision Sport segment, comprised of Sierra Bullets and Barnes Bullets, to a U.S.-based non-strategic buyer not affiliated with the company or any of its officers or members of its board of directors in an all-cash transaction for $175 million at closing. Claurus Corp. did not identify the non-strategic buyer. In September, Warren Kanders, Clarus’ largest shareholder, submitted a non-binding bid to acquire the company’s Precision Sports segment for $160 million. The other brands under the Clarus Corp. umbrella include Black Diamond, Rhino-Rack, Maxtrax and Tred Outdoors.
Amer Sports, the parent of 11 sports brands including tennis’ Wilson, skiing’s Salomon and baseball’s Louisville Slugger, filed for an initial public offering to list its shares on the New York Stock Exchange. While the initial paperwork doesn’t yet list an offering size, it has been widely reported that Finland-based Amer is seeking a $10 billion valuation. The combined business pulled in $3.55 billion in revenue in 2022, its last disclosed full year, and $3.1 billion in the nine months ending Sept. 30, 2023, according to the document. The outdoor performance brands account for the majority, about $1.14 billion in the 2023 period; apparel garnered $1.04 billion and ball and rackets sports tallied the rest—$866 million. About two-thirds of sales are wholesale to retailers with the balance direct-to-consumer sales. The largest brands are Salomon ($949 million in sales for nine months of 2023), Arc’teryx ($941 million) and Wilson ($866 million).
Cosmetics & Pharmacy
Firelight Capital Partners, an operationally-oriented private equity firm investing in lower middle market consumer brands and DTC concepts, is pleased to announce its first platform investment in beauty with the acquisition of Fromm International (“Fromm”) from the Simon-Johnson family, who have owned the business since founding it in 1907. Fromm is well respected in the beauty industry, known for its branded product lines of innovative tools, accessories and everyday beauty essentials for both professionals and consumers. With the acquisition of Fromm, its fourth platform investment, Firelight extends its unique investment model, bringing together world-class industry talent, digital acumen and channel expertise, into the dynamic beauty and wellness sector. With 35 years of dedicated service and leadership, Kevin Barrett, the current President of Fromm, will retain his title, continue to shape the Company’s strategy and work on special projects but transition leadership of day-to-day operations to Martin L. Okner, who was appointed CEO by Firelight Capital Partners effective January 2nd. Martin L. Okner, CEO, is a seasoned beauty executive with a proven track record of leadership in the beauty and consumer packaged goods sectors. Most recently as President of dpHUE and with previous experience at Fortune 500 companies such as Revlon and Cadbury, Mr. Okner brings a wealth of experience and a vision for innovation that align with Firelight Capital Partners’ strategic goals for Fromm.
Chinese cosmetics brand, Hi!Papa has closed a Series A+ funding round led by L Catterton. Financial terms were not disclosed. The investment will help the Gen Alpha-focused line further scale in the country’s rapidly growing kids personal care market. The Chinese kids personal care market has been growing approximately 12 percent a year over the past four years and is expecting to hit a value of RMB52 billion by 2026. “Hi!Papa is committed to providing school-age kids in China with safe, gentle, and effective skin care solutions that meet their unique needs,” commented Hi!Papa Founder and CEO Jiangsheng Xuyu.
Dr. Reddy’s announced that it has acquired MenoLabs® business, a leading women’s health and dietary supplement branded portfolio from Amyris, Inc. (“Amyris”) in Amyris’ Chapter 11 sales process. Dr. Reddy’s acquired the entire MenoLabs supplements portfolio which includes seven branded products designed to provide health support and address symptoms of perimenopause and menopause. Brands include MenoFit™ and MenoGlow™ probiotics, Happy Fiber™ and Well Rested™ dietary supplements, Athena’s Shield™ menopause support supplement, and Goodness Glow™ and Keep Glowing Gorgeous™ supplements for healthy aging support. The deal also includes the MenoLife® health tracker app which supports the product line and provides community, education, and information to consumers regarding menopause. MenoLabs’ portfolio of products is sold in the United States, primarily through the brand’s own and other e-commerce marketplaces including Amazon and Walmart.
Discounters & Department Stores
Last year, total merchandise returns amounted to $743 billion, a rate of 14.5%, according to research using retail survey data from the National Retail Federation and customer data from analytics firm Appriss Retail. Survey respondents included “more than 60 of the top 100” U.S. retailers, per the report. According to those respondents, fraudulent returns, which include the use of counterfeit receipts, shoplifting, organized retail crime activity and other fraud and abuse, equaled 13.7% of returns. That extrapolates to $101 billion, the groups found. In December 2022, NRF and Appriss estimated that more than $816 billion worth of merchandise was returned that year, and that for every $100 in accepted returns, $10.40 was lost to fraud. However, those results are not comparable to this year’s, due to a change in methodology, per a NRF press release.
In anticipation of incorporating advertisements on Prime Video, Amazon is also delving into the development of movies and TV series inspired by the Warhammer 40,000 games. On the flip side, Walmart, not aiming to take over the movie world, recently shared news about teaming up with Unity, a platform for 3D experiences. This partnership allows game and app creators to directly link Walmart’s shopping features into their creations, making it possible to sell real items in 3D experiences on over 20 platforms. These initiatives are responses to the ongoing challenge of consumer hesitancy to spend in 2023 and beyond, driven by concerns about inflation. Last month, Walmart CEO Doug McMillon expressed apprehensions regarding consumer spending in 2024. In an interview with CNBC, McMillon pointed to heightened credit card balances and constrained household budgets, casting doubt on the extent of consumers’ expenditures despite their recent resilience.
The world is going wild for Stanley cups. And no, not the hockey kind. Just ask Target. It appears that for some Valentine’s Day revelers this year, nothing will spell L-O-V-E more profoundly than the gift of an oversized rose-hued stainless steel insulated tumbler that’s downright clunky, way too heavy to carry around when filled up for “all-day hydration,” but is still a solid viral sensation in the New Year. Target in December dropped a limited-edition Valentine’s collection of Stanley tumblers in bright pink and cherry red tones that included an enormous 40-ounce mug, smaller two-pack tumblers in cute packaging with the message “It was Love at First Sip,” and a Stacking Beer Pint tumbler. Shoppers jumped on the items, in some cases quite literally. The proof was documented in TikTok videos that showed people lining up outside of Target stores waiting to rush in to grab these limited-edition Stanleys when doors opened.
Emerging Consumer Companies
Short-term rental provider Frontdesk lays off entire staff, faces closure
Short-term rental provider Frontdesk has laid off its entire 200-person workforce and is on the verge of shutting down after failing to raise additional capital. The Milwaukee-based startup, which managed over 1,000 furnished apartments across the US, made the mass layoff announcement during a two-minute Google Meet call. CEO Jesse DePinto informed employees that the company would be filing for a state receivership. Frontdesk had recently acquired smaller rival Zencity. The company had raised approximately $26 million from investors including JetBlue Ventures, Veritas Investments, and Sand Hill Angels. Frontdesk had attempted to sell investors on a new plan of doing full building management but was unsuccessful. The startup’s business model, which involved leasing apartments at market rental rates and furnishing them for short-term rentals, faced challenges due to upfront costs, capital expenditures, and variables in demand and rates. Other companies in the space, including Stay Alfred, Domio, Lyric, Zeus Living, The Guild, and WanderJaunt, have also encountered difficulties.
Forward Consumer Partners closes debut fund at $425 million
Private equity firm Forward Consumer Partners has closed its debut fund, Forward Fund I, at its $425m hard cap. The fund, which exceeded its target, will invest in branded consumer businesses that make beloved products. Forward’s core strategy is to make majority equity investments of $25–100m in growing consumer brands, with the ability to execute larger transactions through its co-invester network. The firm also operates Fast Forward, a strategy that incubates consumer brands from inception. Forward’s team has diverse experience across investing, advising, and operating roles, with backgrounds at leading firms including L Catterton, McKinsey, KKR, Goldman Sachs, and Endeavor. The firm has also assembled an Advisory Board comprising accomplished leaders from the consumer and investment communities. Forward’s Founder and Managing Partner, Matt Leeds, expressed gratitude for the support of investors and excitement for the firm’s future accomplishments. Forward currently manages $425m of committed capital through its debut fund.
Food & Beverage
Danone has reached an agreement to sell its Horizon Organic and Wallaby brands to investment firm Platinum Equity for an undisclosed amount. The sale of its premium organic dairy businesses in the U.S. is part of Danone’s portfolio review and asset rotation program announced in 2022. Danone will retain a minority stake in the business. The closing of the transaction is subject to customary conditions. The sale comes a year after Danone announced it would explore strategic options for its organic dairy business in the U.S., which includes Horizon Organic and Wallaby.
SYSTM Foods, a partnership between SYSTM Brands and GroundForce Capital, has acquired HUMM Kombucha. HUMM will join SYSTM’s portfolio of plant-based functional beverage brands REBBL and Chameleon Organic Coffee. Terms of the acquisition were not disclosed. HUMM is SYSTM’s most recent acquisition since the company acquired Chameleon Organic Coffee from Nestle USA in June 2022. Previously, SYSTM acquired REBBL, an organic beverage brand that creates plant-based elixirs, in May 2022. HUMM, a gut-health and wellness focused kombucha beverage brand in Bend, Ore., was founded in 2009 by Jamie Danek and Michelle Mitchell. HUMM is a zero-sugar, probiotic soda, probiotic seltzer, is Whole30 approved, and is manufactured through a fermentation process of combining sweet tea with bacteria and yeast, according to the company. SYSTM Foods is a privately held functional beverage brand platform that acquires and operates beverage brands geared toward better-for-you organic and functional products, according to the company.
Snacking company Mezcla, best known for delivering the texture of a classic rice crispy and traditional protein bar flavors using quinoa as a key ingredient, has officially raised $4 million in series A led by Dream Ventures and Santatera Capital. Richard Blankenship, founder and CEO of Dream Ventures and Alejandro Gonzalez, Santatera Capital’s managing partner, joined Mezcla’s board upon closing the round. It brings the company’s total funding to $7.5 million to date. Other participating investors include Fed Muyshondt, CEO of Coca-Cola’s Bodyarmor; Jake Kassan, founder of MVMT; Daniel Weinand, cofounder of Shopify; Nicholas Bertram, former president of Giant and current president of Flashfood; BrightFarms’s CEO Steve Platt; Maya French, founder of Koia and venture studio M.A.D Projects; Dylan Barbour; and several high-profile athletes, such as Seth Curry and Ryan Conrad.
Grocery & Restaurants
TGI Fridays has agreed to sell eight corporate-owned restaurants in the Northeast to former CEO Ray Blanchette, the company said Wednesday, and said it would close 36 underperforming locations domestically. Dallas-based Fridays said it would close the 36 underperforming locations in select markets across the U.S. as part of its ongoing strategy. It did not identify the locations to be shuttered. A company spokesperson said Fridays has 233 domestic restaurants, including 104 corporate stores and 129 franchised units. As for the eight-unit sale, the company said in a statement: “Blanchette brings an unmatched understanding of the TGI Fridays business and the restaurant’s commitment to delivering excellence for guests. Following the finalization of the sale, Blanchette will lead the locations into a new phase of revitalization.” The eight stores being sold to Blanchette include six in Massachusetts and two in New Hampshire. Blanchette, who served as CEO of TGI Fridays for five years, stepped down from the position in May.
Pinstripes Inc., the large-venue dining and entertainment brand, and Banyan Acquisition Corp. announced they closed their previously announced business combination on Dec. 27, and the company’s stock began trading publicly Tuesday. The Northbrook, Ill.-based company, which highlights bowling, bocce and bistro menu offerings, said Banyan, which has changed its name to Pinstripes Holdings Inc., was trading its Class A common stock and warrants on the New York Stock Exchange under the ticker symbols PNST and PNST WS. Dale Schwartz, Pinstripes’ founder and CEO, and other management team members continue in their management roles. Pinstripes last year expanded its C suite with the appointments of Tony Querciagrossa as chief financial officer and Shannon Keller as chief marketing officer. Pinstripes, which has 14 locations, offers a full-service Italian-American food and beverage menu and activities seven days a week. Its 25,000- to 38,000-square-foot venues can accommodate groups of 20 to 1,500 people for private events, parties, and other occasions. The companies had announced the special purpose acquisition company deal in June.
Home & Road
Longtime Conair executive Ron Diamond is changing roles at the housewares giant, vacating his president and CEO post to become vice chairman of the board. Kristie Juster, a Newell Rubbermaid veteran, will succeed Diamond as president and CEO beginning Jan. 8. During his 44 years at Conair, Diamond played a pivotal role in the growth and expansion of the company. Under his leadership, the Conair brand evolved from a modest line of hairdryers and curlers into a global leader in personal care and kitchen appliances. Diamond was instrumental in the acquisition of key brands, including the transformative purchase of Cuisinart in 1989. Diamond was also instrumental in developing and expanding Conair’s manufacturing capabilities in China. As CEO of the company, Diamond transitioned Conair from being a family-run business to an institutionally-owned company with backing from American Securities LLC.
For The Dump, part of Top 100 retailer Haynes Furniture, its strategy — and its inventory — is all about opportunity. The Virginia Beach, Va.-based retailer specializes in acquiring overstocked mid-to-upper-end inventory or procuring products from distressed brands and selling them for a significant discount. Most recently, it acquired unsold retail assets of Mitchell Gold + Bob Williams when the former Top 100 brand closed in August. “That’s our mission, to be able to curate and know what’s really good out there. We pride ourselves on really knowing furniture,” President Randi Strelitz told Furniture Today. “I love furniture; I love design. I love this stuff. We know the good stuff and the quality.” In all, the family-owned and -operated brand acquired around 250 truckloads of Mitchell Gold’s unsold retail inventory in November and began spreading it around its 13 stores. The merchandise is available on a first-come-first-served basis at The Dump Luxury Outlets in Atlanta; two stores in Chicago, Dallas, Houston, Tempe, Ariz.; and Virginia locations in Norfolk, Hampton and Richmond, along with its four Virginia-based Haynes Furniture stores in Virginia Beach, Newport News and two in Richmond. All locations are discounting the MG+BW merchandise up to 80% below the original price.
Jewelry & Luxury
Bruce Cleaver, who has served as De Beers co-chair since stepping down as CEO last year, is leaving the company’s board and will no longer hold that title. Cleaver will continue with the company in “an advisory capacity,” spokesperson David Johnson tells JCK. Cleaver is also leaving the board of Element Six, the De Beers–owned synthetic diamond manufacturer. “The focus of Bruce’s role on these boards was to enable a smooth transition of leadership to [current CEO] Al Cook,” says Johnson. “Bruce also supported the finalization of the commercial negotiations with the government of the Republic of Botswana. With the leadership transition complete and with De Beers and Botswana having signed heads of terms for the new agreements, Bruce has delivered on those objectives.”
A French regulatory body has fined Rolex €91.6 million (approximately $99.9 million) over its decade-long practice of preventing authorized Rolex dealers in France from selling its watches online. The Autorité de la Concurrence, or French Competition Authority, announced the fine Dec. 19. It followed a nearly seven-year investigation that began in January 2017 at the behest of French retailer Pellegrin & Fils, which was an authorized Rolex distributor from 1999 until the watch brand dropped it in 2013, and the Union de la Bijouterie Horlogerie, a union for workers in the French watch and jewelry industries. The investigation included dawn raids on Rolex’s French offices in 2019.
Office & Leisure
Spin Master, a global children’s entertainment company, has completed its previously announced acquisition of U.S.-based Melissa & Doug, an early childhood play brand, for $950 million. “This acquisition brings together two formidable leaders in the toy industry, both driven by a passion to create magical play experiences for children and inspire imaginations on a global scale,” said Max Rangel, global president, chief executive officer, Spin Master. “By adding Melissa & Doug’s complementary product line to our existing toy portfolio we expand our capabilities in early childhood play and further bolster Spin Master’s leadership in the children’s entertainment industry. Our combined expertise, and the addition of Melissa & Doug’s high-quality, open-ended creative and developmental toys, positions both Spin Master and Melissa & Doug to unlock further growth across new and existing channels and in markets globally.” The transaction expands Spin Master’s reach in specialty retail and e-commerce channels, and provides a recurring, evergreen product portfolio with a diverse revenue base and significant long-term growth opportunities. As part of the closing of the transaction, the parties have agreed to eliminate the additional contingent earnout consideration of up to $150 million, previously announced on Oct. 11.
Balloon manufacturer Anagram International, which filed for bankruptcy in November, said Wednesday that it has exited Chapter 11 bankruptcy as an independent company. Party City, which owned Anagram and separately filed for bankruptcy about a year ago, exited Chapter 11 in October. Anagram sold itself to a group of its pre-bankruptcy investors, dubbed Celebration Bidco, which had earlier submitted a stalking horse bid. The group includes J.P. Morgan, Neuberger Berman Investment Advisers, Littlejohn & Co., and Barings. As part of the sale terms, Celebration Bidco will assume Anagram’s trade payables and all of the balloon company’s employees will be retained. Party City accounted for 38% of Anagram’s sales, the company said in court documents in November. Anagram had been a wholly-owned subsidiary of Party City. However, that business wasn’t part of Party City’s Chapter 11 case. While in bankruptcy, Party City had moved to cancel its services, intellectual property licensing and supply agreements with Anagram. Anagram has renewed its contracts with Party City following the sale to Celebration Bidco, court documents filed last week show. Anagram will operate as an independent company going forward.
Technology & Internet
Apple shares slid less than 1% on Friday after The New York Times reported that the U.S. Department of Justice is preparing an antitrust lawsuit against the iPhone maker, which could be filed as soon as this year. The agency’s lawsuit could target how the Apple Watch works exclusively with the iPhone, as well as the company’s iMessage service, which is also solely available on Apple devices. It could also focus on Apple Pay, the company’s payments system, according to the report. The lawsuit, if it comes to pass, would be the biggest antitrust risk for Apple in years. The U.S. is Apple’s largest market, and Apple says the way in which iMessage and the Apple Watch work are essential features that distinguish iPhones from Android phones. The news comes as investors and analysts have started to fret about the various regulatory risks facing Apple, including new regulations in Europe over the company’s App Store’s control over iPhone software distribution, as well as a recent Justice Department trial targeting Google’s search deals, including its lucrative arrangement with Apple.
Apple supplier and lead iPhone assembler Foxconn on Friday reported a revenue drop for the final quarter of 2023 and said it expects a year-over-year decline in sales for its first quarter of 2024. Foxconn revenue for the last three months of the year totaled NT $1.85 trillion ($59.7 billion), a 5.4% dip from the year-ago period. Foxconn attributed the decrease to weak or flat sales in its computing products, smart consumer electronics products and cloud and networking products. The company’s December revenue also fell 27% year over year. The outlook follows two downgrades to Apple stock earlier this week. Both firms pointed to softening iPhone sales.
Finance & Economy
Demand for workers fell to its lowest level in more than 2½ years in November while hirings and layoffs both moved lower, the Labor Department reported. The department’s Job Openings and Labor Turnover Survey showed employment listings nudged lower to 8.79 million, about in line with the Dow Jones estimate for 8.8 million and the lowest since March 2021. Openings fell by 62,000, though the rate of vacancies as a measure of employment was unchanged at 5.3%. The ratio of job openings to available workers fell to 1.4 to 1, still elevated but down sharply from the 2 to 1 level that had been prevalent in 2022. Companies had faced a severe supply-demand mismatch in the period after the Covid pandemic began, a situation that has made gradual progress back to a more normalized state.
Richmond Federal Reserve President Thomas Barkin on Wednesday expressed confidence that the economy is on its way to a soft landing, but obstacles remain that will require caution from him and his fellow policymakers. While noting progress made on inflation as economic growth has stayed afloat, the central bank official said interest rate hikes remain “on the table” even though Fed officials at their most recent meeting in December indicated that this round of policy tightening is probably over. Inflation by the Fed’s preferred measure of personal consumption expenditures prices rose 2.6% in November from a year ago, and was up 3.2% excluding food and energy. That’s well below its mid-2022 peak but still above the Fed’s 2% target.