We are excitedly counting down the weeks until the Consensus Great Brands Show (CGBS), which will take place on Wednesday, September 25th, at the New York Times TimesCenter in Manhattan – https://greatbrandsshow.com/. With the date of the CGBS approaching, we are using this space each week to profile a different company that will be taking the stage in September. As we strive to assemble the most compelling slate of participating companies yet in the history of this event, we hope our weekly previews underscore our growing anticipation for this year’s show and give you a head start on learning about these dynamic brands and entrepreneurs.
In 2015, just after the Academy Awards ceremony where she was a nominee for Best Actress in a Leading Role for Wild (she previously won the category in 2006 for Walk the Line), actress Reese Witherspoon launched Southern-inspired lifestyle brand Draper James. The brand embodies Ms. Witherspoon’s personal style and sensibility and celebrates the authentic spirit of the Southern stories and lessons she grew up with in Nashville, Tennessee. In fact, Draper James is named after Ms. Witherspoon’s quintessentially Southern grandparents, Dorothea Draper and James Witherspoon, whom she credits for teaching her everything she knows about gracious Southern living.
Today, Draper James brings contemporary flair to timeless Southern grace, charm and style across women’s apparel, accessories and home accents. Draper James sells directly to consumers through its ecommerce website and operates a flagship store in Nashville and three additional stores in Dallas, Lexington and Atlanta. In addition, the Company’s line is available at retailers including Dillard’s and Belk. Draper James has created exclusive apparel and accessories collections for Nordstrom, Net-a-Porter and Saks Fifth Avenue, sandals and casual footwear with Jack Rogers, party goods with Coterie and bedding, entertaining and gifting collections with Crate & Barrel.
Beyond being just the founder and face of the brand, Ms. Witherspoon serves as Creative Director for Draper James. She is active across business functions, providing design direction and influencing outreach to consumers, including by posting to Draper James’s “Love, Reese” blog. On its website, Draper James describes its brand as “steeped in Southern charm, designed for real life, and unapologetically pretty.” Its signature color — characterized by the design team as “pretty and lighthearted, a truly happy blue” – is highlighted in store and website design, packaging, product labels and handbag interiors.
At Consensus, we are always intrigued by celebrity-turned-entrepreneur ventures. It is fun to predict and follow those which have staying power and resonate as true consumer brands as opposed to those which are short-term monetizations that quickly fade once the next ‘big thing’ emerges. By welcoming Draper James to the Consensus Great Brands Show on September 25th, we reveal our expectation that Draper James will achieve continued long-term success.
Headline of the Week
ThredUp, the San Francisco-based fashion resale marketplace, announced a new $100 million round of funding along with a previously unannounced investment of $75 million. The new investment included Park West Asset Management, Irving Investors and earlier backers Goldman Sachs Investment Partners, Upfront Ventures, Highland Capital Partners and Redpoint Ventures. To date, ThredUp has raised more than $300 million. It was also announced that ThredUp is partnering with Macy’s and JCPenney on in-store spaces, which are planned at 500 to 1,000 square feet, with new items on a weekly basis and brands that aren’t already in those stores.
Apparel & Footwear
Tapestry, which owns fashion and accessories brands Kate Spade New York and Coach, saw its shares tumble by more than 22% last Thursday, marking a 52-week low for the fashion conglomerate. In an investor call last week, Tapestry chief executive officer Victor Luis said that the company is scaling back plans to open new Kate Spade stores and launch new products. He attributed the decline to a number of factors, including the cost related to bringing Kate Spade footwear in-house and the bump Kate Spade sales received after the brand’s founding designer’s death last year.
Continued weakness at Victoria’s Secret took a toll on L Brands’ second-quarter performance as both profit and sales declined. But the company still managed to beat the Street’s earnings estimates. Adjusted earnings came in at $0.24 cents a share, beating estimates of $0.20 a share. “Looking to the second half of the year, our number one priority continues to be improving performance at Victoria’s Secret,” management said in prepared remarks. L Brands has been working to turnaround its lingerie banner, which has struggled to find its footing as consumers increasingly opt for lingerie brands that emphasize comfort, inclusion and diversity over overt sex appeal. In line with changing attitudes, L Brands marketing chief Edward Razek, an architect of Victoria’s Secret sexy image, is stepping down. And Victoria’s Secret will not air its annual fashion extravaganza on national television this year, although it is unclear as to whether the show will go ahead.
Menswear giant Tailored Brands has exited the corporate dress business. The company, whose brands include Men’s Wearhouse and Jos. A. Bank, said it has closed on the sale of its corporate apparel business to a group led by the existing corporate apparel U.K. executive team for $62 million in cash. The company will use proceeds from the deal to reinvest in its core business and to pay down debt. “The consummation of this transaction supports our previously stated strategy to focus on our core retail business in the U.S. and Canada while reducing debt,” said Tailored Brands president and CEO Dinesh Lathi. “We remain focused on improving our performance by transforming our customer experience through three key strategic initiatives: delivering personalized products and services, inspiring and seamless experiences in and across every channel, and brands that stand for more than just price.
Athletic & Sporting Goods
Shoemaker New Balance has sued the owners of the Nautica apparel brand for design patent and trademark infringement. In the suit, filed at the US District Court for the District of Massachusetts, New Balance said that Nautica’s latest products infringed its trademark for a block ‘N’ logo, as well as the design patent for its 247 shoe. According to New Balance, its trademarks for the block N logo “embody an enormous amount of goodwill” and are “among the company’s most valuable assets”. The company said that Nautica’s latest products, including footwear and other clothes such as polo shirts, bear a block N logo that was likely to cause confusion among consumers.
Stack Sports, the largest and fastest-growing global provider of sports technology, announced the acquisition of Affinity Sports and Blue Sombrero from DICK’S Sporting Goods. The acquisition of these two organizations continues Stack Sports’ strategy of developing, acquiring, and growing best-in-class technology solutions for the sports industry. Affinity Sports provides specialized software management technology to various youth sports National Governing Bodies and large-scale organizations. Blue Sombrero is a leading provider of websites, registration, and league management tools for youth sports organizations and its customers include an impressive list of the most prominent organizations and governing bodies in baseball, soccer, football and more.
St. Cloud Capital announced an investment in Little Rock, AR-based AR HIIT, LLC, an Orangetheory Fitness franchisee. It is an investment out of St. Cloud’s third fund, which has committed capital of $250 million. The franchisor, Orangetheory Fitness, is a market leader in boutique fitness in the United States with over 1,200 owned/franchised studios in 50 states and 22 countries. St. Cloud’s investment was used to help fund the acquisition by Rock Ridge Growth Partners, LLC. The company currently operates seven Orangetheory Fitness studios with the development rights to open an additional seven studios in the State of Arkansas.
Cosmetics & Pharmacy
Morphe Holdings, a global beauty company, and General Atlantic, a leading global growth equity firm, announced today the launch of a new partnership in which General Atlantic will acquire a majority stake in the company alongside existing investor Summit Partners and co-founders Chris and Linda Tawil. Additional terms of the deal were not disclosed. “We are proud of what we have achieved through the success of Morphe Holdings and our marquee brand Morphe,” said Myles McCormick, Chief Executive Officer of Morphe Holdings. “General Atlantic’s investment will position us for our next phase of growth as we continue to grow Morphe and expand to develop a new global platform with a portfolio of next-generation beauty brands.”
Estee Lauder Cos Inc last week forecast full-year revenue and profit above Wall Street expectations, putting to bed concerns of slowing demand in China due to trade tensions and Hong Kong protests as sales of its luxury skin care products soared, propelling its shares to a record high. Cosmetic companies like Estee Lauder and L’Oreal are seeing a boom in their business in the Asia-Pacific region, mainly in China, as affluent millennials spend more at beauty retailers and duty-free stores at airports. Shares of Estee Lauder, which reported better-than-expected fourth-quarter results, rose as much as 11% to $198.62.
Discounters & Department Stores
Nordstrom’s stock soared after the company released a mixed earnings report that showed weakening sales, but handily beat Wall Street profit estimates. Its stock rose about 5% in extended trading, after initially jumping more than 21%. Here’s how the company did, compared with what Wall Street was expecting, according to Refinitiv consensus estimates: Adjusted earnings per share: 90 cents, vs. 75 cents estimated and Revenue: $3.87 billion, vs. $3.93 billion estimated. “We delivered strong bottom-line results, demonstrating our inventory and expense discipline. We exited the quarter in a favorable inventory position and made important strides in productivity,” said Erik Nordstrom, co-president of Nordstrom.
Just a few weeks after Barneys New York filed for bankruptcy, Chief Digital and Technology Officer and Executive Vice President Katherine Bahamonde Monasebian discussed some of the problems that forced the company into that position in the first place. “Department stores used to be, in their heyday, the emporium. They were the center of the community. They were the place you went to find what you needed, perfectly curated. There was no retail without department stores,” Monasebian said during a panel at the eTail East conference this week, noting that the model has had to evolve in a period of change. “It’s easy to say, ‘Amazon killed department stores. Millennials killed department stores.’ It’s easy to say, but it’s actually a confluence of a lot of things. Yes, it’s the digital upstarts. Yes, it’s leverage — it’s very hard to have heavy debt loads on razor-thin margins.”
Once again this year Target followed fellow mass merchant Walmart in posting a strong quarterly performance at a time of malaise for many other retailers. And once again, the company and analysts credited Target’s initiatives and investments that it’s launched in recent years. CEO Brian Cornell pointed to the “strategy and the durable financial model we’ve built over the last several years” with the strong Q2 numbers. “By appealing to shoppers through a compelling assortment, a suite of convenience-driven fulfillment options, competitive prices and an enjoyable shopping experience, we’re increasing Target’s relevancy and deepening the relationship between our guests and our brand,” he said.
Emerging Consumer Companies
Huron, a New York City-based men’s personal care brand, announced a $1 million seed round. Customers can purchase individual products, or can purchase products as part of larger kits or through subscriptions. The initial lineup includes body wash ($14), face wash ($14) and face lotion ($15).
Burrow has launched a sleep kit – a pad, a pillow, and bed linens designed for sofa crashing. The kit debuts at $350, and is designed to fit the Burrow three-seat sofa, but is capable of fitting most three-seater sofas from any brand. The memory foam topper adds a layer of cushioned support, and makes it feel more like a regular mattress – without the inconvenience of heavy furniture and pull-outs.
For cool, contemporary essentials for you and your home, Jenni Kayne is the place to head. A stylish amalgamation of interiors, style, entertaining, wellness with a thoroughly Californian vibe, this brand is a secure favorite with fashion insiders and celebs alike including Jessica Alba, Kristen Bell, and Brooklyn Decker to name a few. And now, Kayne has launched a new sneaker line, available now on her site. Jenni Kayne offers timeless styles meant to suit your everyday look, wear ’em with jeans or dresses for daily elevation. She’s taken her inspiration from the ’90s skate shoe for the shape, featuring minimal and subtle detailing. The three new styles are available in the three colorways of natural, black and charcoal. For materiality expect neoprene, stretch suede and tech nubuck with pricing from $225-$295.
Grocery & Restaurants
Amazon has launched AmazonFresh in Houston, Minneapolis and Phoenix, marking three new cities for the perishables same-day delivery service. Members of Amazon’s Prime customer benefits program in those markets can now shop tens of thousands of products for one- or two-hour delivery, the e-tail giant said Thursday. Also through AmazonFresh, Prime members can order best-selling items on Amazon.com, including electronics, home and kitchen, toys and other products. With the latest expansion, AmazonFresh is now available in 18 major market. Groceries ordered through AmazonFresh are delivered from Amazon fulfillment centers. AmazonFresh delivery costs $14.99 per month on top of the $119 annual Prime membership.
The Hershey Co., through its C7 Ventures venture capital vehicle, has announced minority investment in snack businesses Blue Stripes L.L.C. and Fulfil Holdings Ltd. Blue Stripes, based in New York, was founded by cacao entrepreneur Oded Brenner, who created Max Brenner, a chocolate sensory immersion. Blue Stripes Cacao Shop is a storefront that showcases cacao pulp in a range of offerings from bowls to shakes. Based in Dublin, Ireland, Fulfil manufactures vitamin-fortified, high protein nutrition bars in the U.K. and Ireland. Containing fewer than three grams of sugar, the bars come in such flavors as chocolate orange, white chocolate and cookie dough, and chocolate hazelnut whip.
The Simply Good Foods Co., a developer and marketer of nutritional foods and snacks under the Atkins and Simply Protein brands, has agreed to acquire Quest Nutrition, L.L.C., El Segundo, Calif., for $1 billion in cash, or approximately $870 million, net of tax benefits, on a cash-free and debt-free basis. Quest Nutrition manufactures and markets a range of products under the Quest brand, including protein bars, protein cookies, protein powders, protein chips and frozen pizzas. Quest has net sales of $345 million and adjusted EBITDA of $50 million, and the combined businesses generate an estimated $800 million in net sales and have strong operating margins, according to Simply Good Foods.
Home & Road
The Home Depot reported mixed results for its second quarter as earnings beat analysts’ estimates but sales fell short. The retailer also lowered its sales outlook for the year amid declining lumber prices and fears that tariffs will cut into consumer spending. Net income fell to $3.48 billion, or $3.17 a share, compared with $3.51 billion, or $3.05 a share, in the year-ago period. Analysts had expected earnings per share of $3.08. Sales inched up 1.2% to $30.84 billion, missing estimates of $30.99 billion. Total same-store sales rose 3%. Same-store sales in the U.S. were up 3.1%, missing expectations.
Organic growth through increased same-store sales along with the revenue impact of Joybird and nine Arizona stores acquired last August boosted La-Z-Boy’s fiscal 2020 consolidated first-quarter sales by 7.5% to $413.6 million. For the three months ended July 27, La-Z-Boy reported net income of $18.1 million, 38 cents per diluted share, a slight dip from $18.3 million, or 39 cents per share, in fiscal 2019’s first quarter. During the first quarter, written same-store sales for the La-Z-Boy Furniture Galleries network increased 4.7%, and were up 3.5% for the company-owned retail segment.
Swedish furniture retailer Ikea has established what it’s calling the “Ikea Home Smart” as its own business unit within the company. “At Ikea, we want to continue to offer products for a better life at home for the many people going forward,” said Björn Block, newly installed head of Ikea Home Smart. “In order to do so, we need to explore products and solutions beyond conventional home furnishings.” Started as a project in 2012, Ikea Home Smart incorporated digital elements and technologies into products and solutions. Several launches within the smart home area followed, and now Ikea has made the strategic decision to devote even more resources to the home smart area.
Jewelry & Luxury
Bailey Banks & Biddle, often called America’s oldest jewelry store chain, recently closed two of its three stores, according to its website. The only Bailey Banks location currently listed as open on its website is at Town & Country Village in Houston. Its stores in Dallas and Plano, Texas, have been closed, its site says. Bailey Banks & Biddle started the year with five stores. However, by March it closed two stores—one in King of Prussia, Pa., and the other in Houston.
Blue Nile has named Sean Kell, who currently heads A Place for Mom, the senior living referral service, its new chief executive officer. Kell takes over from Eric Anderson, the Bain Capital Private Equity executive who has served as the Seattle-based e-tailer’s CEO since January, when he replaced Jason Goldberger, who held the job for a year and a half. Harvey Kanter remains company chairman. He led the company from 2012 to 2017. This appointment means that Blue Nile has been headed by four different people since Bain Capital completed its acquisition of the company in February 2017. Kell is also the third outsider in a row to be named permanent CEO.
Pandora plans to do a major relaunch of its brand, as it reported another quarter of declining sales. On a conference call following the release of its financial results, newly appointed CEO Alexander Lacik said that the company is trying to reconnect with its core consumer, with a redesigned logo and greater use of pink as a “market color.” “All data clearly suggests buying bracelets, as well as collecting, is still in demand,” Lacik said. “The model is not broken. We just did need to deliver better on today’s consumer preferences.” He added: “There is no quick fix in improving brand relevance. It is something that will improve over time.”
Office & Leisure
Las Vegas is about to get a new attraction that combines retail with PC gaming and esports. Razer, one of the world’s largest providers of gaming hardware, software and services, will open a 2,400-sq.-ft. location that includes a gallery and retail section, at The Linq Promenade in Las Vegas on Sept. 7. Each floor will have different “experience zones,” allowing gamers to explore Razer’s full slate of offerings. According to Razer, the Las Vegas store will look to foster an avid gaming community. Esports and gaming events will be organized weekly in collaboration with Razer partners and The Linq Promenade.
The Las Vegas outpost will be Razer’s second U.S. location, with the first at the Westfield Mall in downtown San Francisco. Razer has two additional stores, in Hong Kong and Taiwan.
Peppa Pig-owner Entertainment One’s shares rose more than 30% to a record high on Friday, surpassing the price agreed by the company’s board with U.S. toy maker Hasbro Inc in a sign that investors see some chance of a counter offer. The boards of the two companies said on Thursday that they had agreed a price of roughly $4 billion (3.27 billion pounds) in cash for the deal, which gives Hasbro access to Entertainment One’s lucrative shows aimed at infants and preschoolers. Under the deal, Entertainment One’s shareholders will receive 560 pence per share, representing a premium of 26.4% to Thursday’s close.
Several of Game Informer’s editorial staff took to Twitter on Tuesday to reveal that they had been laid off from the long-running video game magazine, which is owned by GameStop. The positions at the magazine make up just one part of GameStop’s layoffs, which apparently eliminated 120 positions for a total of 14% of the company’s total associate base at its headquarters and other offices in what GameStop is calling necessary to “reduce costs and better align the organization with our efforts to optimize the business to meet our future objectives and success factors.” The layoffs seem to have impacted roughly half of the staff at the Minneapolis-based publication. It seemed early on when the news broke that the decision came from GameStop, based on a tweet from former managing editor Matt Bertz. For GameStop, the retail giant behind Game Informer, this incident is one more signal of the company’s struggle to stay afloat.
Technology & Internet
U.S. retailers generated $139.67 billion in online sales in the second quarter on a non-adjusted basis, a 13.6% increase compared with $122.93 billion a year earlier, the Department of Commerce reports. Total retail sales grew 3.4% in the first quarter on a non-adjusted basis, according to the Commerce Department. That would mean ecommerce represented 14.9% of total retail sales, up from 13.6% in Q2 2018, according to Internet Retailer estimates. It also means that ecommerce represented roughly 49.6% all retail growth.
Amazon struck a deal that gives it the right to eventually buy a stake in India’s Future Retail Ltd., as the U.S. giant seeks to bolster its presence in one of the world’s fastest-growing retail markets. Amazon agreed to buy 49% of Future Coupons Ltd., Future Retail said in a filing Thursday. The deal gives Amazon the option to buy all or part of Future Coupons’ shareholding in Future Retail, though that won’t be exercisable until between three and 10 years. The terms of the agreement weren’t disclosed. People familiar with the matter said last week that Amazon was in late-stage talks to acquire as much as 10% of Future Retail. Mumbai-based Future Retail operates more than 2,000 stores across 400 Indian cities, including the “Big Bazaar” stores that are designed to appeal to value-conscious urban consumers.
The outspoken CEO of online home goods retailer Overstock.com resigned Thursday, days after he issued a press release entitled “Comments on Deep State” that claimed he helped the FBI carry out “political espionage.” In a letter Byrne issued Thursday, he stated that he is “already far too controversial to serve as CEO” and chose to step away after 20 years so that his presence wouldn’t affect Overstock’s business. Overstock is broadly known as an e-commerce site for snagging furniture, decor and appliances on the cheap. But for months Byrne has worked to turn Overstock into a venture focused on blockchain, the technology behind cryptocurrencies like bitcoin.
Finance & Economy
Federal Reserve officials who voted to lower interest rates three weeks ago agreed that the move shouldn’t be viewed as an indication that there is a “pre-set course” for future cuts, according to meeting minutes. The summary indicated that policymakers viewed the move as a “mid-cycle adjustment,” an expression Chairman Jerome Powell used in a news conference afterward that was seen as contributing to a stock market sell-off after the July 30-31 meeting. Markets have been pricing in a series of rate cuts, so Powell’s use of the term spread concern that the Fed might not be as accommodative with policy as anticipated.
The number of Americans filing applications for unemployment benefits fell sharply last week, suggesting the labor market was holding firm despite a manufacturing slowdown and concerns the economy is on a path toward recession. There are few signs a bitter trade war between the United States and China was spilling over to the national labor market, although growth in manufacturing jobs has slowed this year. While hiring has cooled, the pace of job gains remains well above the roughly 100,000 needed per month to keep up with growth in the working-age population.
Wealthy buyers are pulling back from some of the most expensive housing markets in the U.S., the latest sign that sky-high prices and fears of a recession are weighing on a key sector of the economy. Toll Brothers Inc., the nation’s largest publicly traded luxury-home builder, said that purchase agreements fell 3% from a year earlier, worse than a decline of less than 1% that was expected by a Bloomberg survey of six analysts. The company’s orders in California, home to some of the priciest markets in the country, tumbled 36% from a year earlier.