October Monthly News Roundup
By TRAUB On October 31, 2019
We are pleased to share with you our roundup from October 2019. There continued to be high activity in the private markets as well as new category exploration, big changes for retail giants, and an increased focus on the circular economy in fashion.
After last month’s high levels of activity across the public market, October saw far fewer companies announce plans to go public with the exception of Cole Haan filing a confidential IPO. The quieting IPO market could be, in part, due to the downturn in sentiment toward recent consumer IPOS and the ongoing WeWork saga. As a result, during what is usually a busy time for new issues, more companies are choosing to take an alternative route to an IPO by either remaining private or aiming for less expensive direct listings.
Some notable acquisitions this month included: Shiseido’s acquisition of Drunk Elephant ($845M), Simon Property Group’s acquisition of a 50 percent stake in Rue Gilt Group ($280M), Squarespace’s acquisition of social media authoring startup Unfold, VMG Partners’ acquisition of Popchips to launch their Velocity Snack Brands platform, Nuo Capital’s acquisition of a 30 percent stake in the Ludocvico Martelli company, Borletti Groups' acquisition of a 25 percent stake in the Italian luxury fashion label MooRER, H&M’s acquisition of a majority stake in second-hand platform Sellpy, and Chanel’s acquisition of minority stakes in Italian leather goods makers Renato Corti and Mabi, and French clothing manufacturer Grandis. Notable raises this month included: Koio, a direct-to-consumer luxury sneaker brand ($6M), Varley, a women’s athleisure apparel brand ($5M), Hemster, an on-demand tailoring service ($4M), and Otherland, a luxury candle startup ($2.7M). In addition, Christina Tosi’s Milk Bar raised series B funding round to expand into the grocery aisles and LVMH invested in the Generation Z brand, Madhappy.
Big Changes For Retail Giants
This month, giants of the retail and fashion industry continued to undergo considerable changes. The Barneys New York bankruptcy saga continued though it seems to be finally drawing to an end. Authentic Brands Group emerged as the winner; after bids from other parties including one from Sam Ben-Avraham, the investor in Kith, did not materialize. A bankruptcy judge approved the sale to ABG which leaves only a slim possibility that another buyer could come forward before the sale closes. ABG plans to start store-closing sales right after the deal is completed. In the midst of Barneys bankruptcy, Nordstrom opened its first flagship in New York. The seven stories and 320,000 square foot store in midtown Manhattan is home to the company’s largest beauty department along with several exclusive partnerships and a concept space currently inhabited by Burberry. We visited the new store and wrote up our thoughts in a review here. The Hudson’s Bay Company is also attempting to make substantial changes to its structure. This month, Saks Fifth Avenue’s parent company, Hudson’s Bay Co., announced that it agreed to be taken private. The Canadian-based retailer's plan is to buy back the remaining 43 percent of shares it does not currently own at a price of US $7.86. Hudson’s Bay Co. struggled in the public markets as it attempts to right size its business. While the decision to go private may provide the opportunity to turn the business around without the scrutiny of the public market, the process is sure to be full of it's own drama. The Catalyst Group which represents 28% of HBC's shares announced that it intends to vote against the take private plan. A shareholder vote is expected to take place in mid-December and if one thing is for sure, there is sure to be much posturing from all sides until then. Across the pond, Harrods announced that it plans to unveil a new concept store called H Beauty in April 2020, which will offer premium beauty, cosmetics, skincare, and fragrance products across the UK. The French luxury giant, LVMH, confirmed that it made an approach to Tiffany & Co. regarding a potential takeover for $120 per share in cash. In addition, LVMH marked its commitment to create 1000 jobs over the next five years with the opening of a new Louis Vuitton handbag factory in Texas.
New Category Exploration
In October, companies across the industry explored new categories as a way to expand its product offerings. Stock X began the process of shifting its focus to a new set of products: collectibles. The new emphasis on items that continuously trade and are not just consumed signifies the company’s shift towards being a universal “stock market of things.” Goat, the sneaker resale app, has also taken the leap into apparel. It recently launched its new apparel and accessories offering with 50 luxury and contemporary brands. Similarly, Under Armour, in collaboration with Richard Branson’s Virgin Galactic, unveiled a full line of space wear, which includes a spacesuit, training suit, and a limited-edition jacket. The space wear will be worn by travelers on Virgin’s first commercial flight to space, set to take off in 2020. Underwear company Tommy John moved into apparel as well with a collection of men’s and women’s athleisure basics designed to be comfortable yet fashionable. The collection includes technical features, such as water-repellant materials, lightweight fabrics and moisture wicking technology.
Championing A Circular Economy In Fashion
Several well-established brands have ramped up their efforts to promote a circular economy in fashion in order to strengthen their sustainability efforts. Burberry recently partnered with The RealReal in an effort to educate and direct consumers who wish to consign their Burberry items on The RealReal’s website. Burberry has chosen to reward customers who offer their Burberry products up for consignment with exclusive personal shopping experiences across 18 stores in the U.S. In an initiative to address the growing amount of waste generated by the fashion industry, Adidas along with the London-based start-up Stuffstr, rolled out a new program that allows customers to return any items they have purchased in the last five years. The items are then repaired, resold where possible, or recycled into new products. Lego is also considering a rental initiative for its bricks in an attempt to cut down on plastic waste. In addition to vowing to make all of its bricks from sustainable sources by 2030, Lego has invested more than £100,000,000 and hired 100 people to research non-plastic alternatives.
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