January 2020 Monthly News Roundup

We are pleased to share with you our roundup for January 2020. This month we highlight high levels of activity in the private markets as well as bankruptcies and store closings across sectors, the power of niche online communities, and examples of brands pushing into hospitality.

Though the public market was active in 2019, the beginning of 2020 saw far fewer companies announce plans to go public with the exception of Casper, the creator of the DTC "mattress in a box" concept. With now over 175 online mattress brands, Casper is positioning itself as the leader in the sleep economy, focusing on brand and trust in a highly crowded market. While the company still benefits from strong top line growth, it is not profitable. It will be interesting to see how this plays out in the public markets, which are increasingly wary of unprofitable VC-backed consumer businesses. 

Perhaps most notably this month in M&A was Penn National Gaming’s minority acquisition of Barstool Sports valuing the company at $450M. The gambling operator runs or owns low-profile casinos and hotels across the US, and hopes Barstool's brand will bring added traffic to its existing properties and to its online betting app launching soon. Other notable acquisitions this month included: Pentland’s acquisition of Speedo North America from PVH ($170M), WHP Global’s acquisition of the Joseph Abboud brand ($115M), Public Clothing Company’s acquisition of Derek Lam, New Guards Group’s acquisition of Ambush and of Opening Ceremony, Molson Coors’ acquisition of craft beer maker Atwater Brewery, Keurig Dr Pepper’s acquisition of sparkling water brand Limitless, and P&G’s acquisition of women’s shaving products direct-to-consumer brand Billie.

Notable raises this month included: ClassPass ($285M) which is now valued as a unicorn, Farfetch ($250M), Califa, a plant-based food and beverage brand ($225M), Memphis Meats, a food technology that aims to produce cell-based meats ($161M), Moda Operandi, the online marketplace for off-the-runway fashion ($100M), FlashParking, an Austin-based parking management technology tool ($60M), Life House, a tech-enabled lifestyle hotel startup ($30M), Neighbor.com, the Air-bnb of storage ($10M), Olipop, a sparkling tonic beverage brand ($10M), OWYN, plant-based beverage maker ($7.5M), Cann, the cannabis-infused drink company ($5M), Haus, the direct-to-consumer aperitif startup ($4.5), and Stasher, the luggage storage app for travelers ($2.5M).

Bankruptcies and Store Closings

On the heels of continued retail bankruptcies and store closures, more established brands are closing shop. Stationery retailer Papyrus is closing stores around the U.S., with liquidation sales already underway. Bose also announced that it is pulling back on its brick-and-mortar presence, stating that its headphones and speakers are purchased via e-commerce more than in brick-and-mortar stores. Following its sale to New Guards Group (the powerhouse behind Off-White, Heron Preston, and other streetwear brands), Opening Ceremony announced its plans to close all its stores in 2020. Although Opening Ceremony will continue to exist as a single brand, it will no longer exist as a multi-brand retailer. Finally, beloved Fairway Market, the popular New York City grocery chain, filed for bankruptcy with a proposal to sell its five Manhattan supermarkets and its distribution center for $70M to Village Super Market Inc.

The Power of Niche Online Communities 

From the acquisition of Barstool Sports to the launch of Goop's Netflix series, the activity in the space highlights the power of niche online communities. While Barstool Sports and Goop speak to very different audiences, both companies cater to a niche audience in a direct and unapologetic manner. This has brought about heavy criticism from some, but the companies have stayed true to their niche customer base and built loyal communities. Barstool Sports, the popular digital sports publisher with a collection of sports blogs and podcasts, will advance Penn National Gaming’s goal of becoming the best-in-class provider of retail, online gaming, and sports entertainment. Goop, the wellness lifestyle brand, launched “The Goop Lab" series on Netflix, exploring everything from psychedelics, energy work and other controversial wellness topics. In addition, The Athletic, a subscription based sports website and app, raised $50M. The company has nearly one million paid subscribers and expects to be profitable this year. 

Brands Continuing to Push into Hospitality 

Traditional luxury retailers continue to expand into hospitality in order to provide luxury experiences for their customers. LVMH doubled down on hospitality this month. It announced its first Louis Vuitton café and restaurant, set to open next month at its new flagship in Osaka, Japan.  In addition to its new restaurant opening, LVMH also announced Andrea Guerra as the new CEO of the newly created Hospitality Excellence division. This marks just the beginning of more restaurants and hotels as LVMH strives to create a future in both segments -  luxury goods and luxury experiences. In New York, Bergdof Goodman also opened a new bar and restaurant, Goodman's Bar, inside the mens store.

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