In the News
How Two Broke Guys Generated $100 Million In 12 Months — And Fed Millions Of Hungry Kids
Oct 27, 2016
Josh Bezoni and Joel Marion grew their natural nutrition business from $0 to $100 million in just 12 months, while donating millions to charity. Here’s how they did it.
Josh Bezoni was fielding customer service calls in a tiny cubicle at a sports nutrition company in Colorado fresh out of college. His biology degree hadn’t paid off like he’d hoped and his sky-high student loans forced him to paint houses on nights and weekends just to keep his head above water. There was little indication that anything resembling success was in the cards. But hustle can take you far.
Bezoni is now the co-founder of BioTrust, a natural supplement company that exploded from $0 to $100 million in revenue within 12 months of launch and over $400 million in total sales over their first four years. Bezoni founded the company with no outside funding or debt with Joel Marion, a former P.E. teacher and ebook marketing legend. Together, the two have quietly disrupted and dominated the online nutrition industry. Today, BioTrust boasts more than 200 employees, has an A+ Better Business Bureau rating and conducts gold-standard studies on their products; credibility you don’t often see in an industry full of quality control issues and lack of real science.
That success alone is admirable. But Bezoni and Marion did it all while donating millions to charity. For example, since BioTrust opened its doors, the company has donated a meal to a hungry child every time an order is placed. To date, they have provided over two million meals to hungry kids in America—and that’s just the tip of the charitable iceberg.
“The purpose of our company is to create natural, science-backed nutrition products that produce real results for our customers,” Bezoni says. “But we also have a strong charitable mission that helps the team rally around important causes, helps children in need, and gives a deep meaning to our work. The last thing this world needs is another greedy corporation that doesn’t give back.”
Bezoni and Marion did this all without formal business training or deep pockets. Their success stemmed from a burning desire to make a positive impact in the world, even though they didn’t have the traditional resources to do it. Instead, they hustled relentlessly to devour knowledge from underground business coaches like Dan Kennedy, Joe Polish, Tony Robbins, and Tim Ferriss.
As Marion recalls, “Our business education cost us $10 in late fees from the public library and a lot of sleepless nights. Where there’s a will, there’s a way.”
Quitting is not an option
Bezoni’s first attempt at starting an online business ended in complete financial disaster: he racked up $100,000 in personal credit card debt but hustled his way to a thriving online vitamin business. He eventually made enough to pay off the debt and business was good—until the U.S. economy melted down in 2009, when Bezoni’s business took a massive nosedive.
“It was devastating for us all when we had to shut down the company and let our team go,” he recalls. “I made some serious rookie business mistakes and lost everything I had spent years working for. But I stood up, dusted myself off and learned those important lessons. It made me a better man and entrepreneur.”
Bezoni started again fresh in Austin, Texas. Passionate about helping others get in shape, he wanted to start a health publishing ebook business—but didn’t have the know-how. Someone else might study the industry for a few years while working odd jobs and accrue second-rate information at a painfully slow rate. Instead, Bezoni sold his car and called in some favors from business mentors to put on a “Fit Fest” conference for the top online health and fitness ebook publishers in the U.S. and Canada.
The bet paid off. With just $7 left in his bank account, his conference was a huge hit, put him on the radar of the health and fitness community, and introduced him to the partner he needed to start BioTrust: Joel Marion.
From digital ebooks to physical products
Marion was a gym teacher obsessed with living a healthy lifestyle. He also was a self-taught ebook publishing success. Broke, and worried about raising a family on a teacher’s salary, he’d saved $700 from his paycheck to write, publish and market an ebook based on his extensive health and fitness knowledge.
That turned out to be a great move. Following a marketing formula created by a business coach named Jeff Walker, Marion’s first ebook launch did over $250,000 in sales in the first 30 days of business. He soon resigned from teaching and focused full-time on his online business.
Bezoni and Marion hit it off immediately. They worked together with two critical team members, Kim Eschner and Vicky Grossie, to launch an ebook Bezoni wrote called Belly Fat Free. With their shared knowledge, relentless work ethic and marketing prowess, it made over $2 million in the first 30 days.
“One day you’re broke, the next day you’re buying your mom a new car,” Bezoni says. “This is what’s so great about being an entrepreneur in America. Everyone has an opportunity for a better life if you educate yourself, take calculated risks, work smart, give back and don’t give up.”
There was more in store for Bezoni and Marion than publishing ebooks. When their readers asked who they should buy protein powders and vitamins from, Bezoni and Marion didn’t know any companies they trusted enough to recommend. Most vitamin and nutrition products on the market were full of GMOs, hormones, artificial flavors, preservatives and sweeteners. Many didn’t meet label claims or have any scientific studies to support their effectiveness.
So Bezoni and Marion used their profits from their ebook launch to create the honest brand they wanted to see in the market. BioTrust was born.
Doing well while doing good
BioTrust was successful almost immediately because Bezoni and Marion took the time to build lasting relationships with a network of other like-minded ebook publishers that got behind the brand. They also did something many entrepreneurs fail to do: they listened to their customers. When surveyed, customers said they wanted a natural, quality protein powder that tasted great. So that’s exactly what BioTrust gave them.
In the first 30 days of business, Bezoni and Marion did over $1 million in BioTrust Low-Carb protein sales and industry leaders took notice. (Tim Ferriss, top business blogger and best-selling author of The 4-Hour Workweek and The 4-Hour Body, cited BioTrust Low-Carb protein powder as being a perfect Christmas gift.)
“Forget about your opinion as a business owner, always ask your customers what they want instead. It takes your ego out of the equation,” says Marion.
While Marion focused on promoting new products, Bezoni personally recruited a world-class team to support the company’s explosive growth. His secret weapon? LinkedIn and the ability to persuade top talent away from industry-leading companies with equity, the promise of making a difference in the world, and the challenge of building an honest, ethical brand in the questionable supplement space.
And make a difference they did. With the support of their customers, partners and team members, BioTrust has donated over $1.2 million to help grant the wishes of children with life-threatening health conditions, through their national partnership with the Make-A-Wish Foundation®. They’ve also built schools to educate children in developing countries through their partnership with Pencils of Promise. Bezoni and Marion recently donated six figures to water.org to provide safe drinking water to families in developing countries. To say thank you, they hooked him up with tickets to the premier of the latest Jason Bourne movie and introduced him to actor Matt Damon, who supports the charity.
“Matt thanked me for being a company who cares and gives so much. He said most companies don’t,” recalls Bezoni. “I thanked him for being a celebrity who gives back. Most celebs don’t. We’re going to be doing a lot more with Water.org. We love their mission.”
This is the real secret to Bezoni and Marion’s success with BioTrust: they’ve rallied an incredible team, and built honest products around a mission that goes beyond money. As a result of putting customers and charity first, the company launched like a rocket and continues to climb. It’s an example many companies can learn from.
- - Playboy Inks Deal to Acquire Australian Lingerie Brand Honey Birdette. The $333 million deal is expected to close in the third quarter.
- - Gores Group Picks Up Big Strike
- - L.A. Brand Rails Opens SoHo Store, Ups Fashion Offering
- - MeUndies Secures $40 Million Investment
- - Safilo Completes Majority Purchase of California DTC Eyewear Brand
- - Lee Equity Acquires Skin-care Manufacturer Cosmetic Solutions
Playboy Inks Deal to Acquire Australian Lingerie Brand Honey Birdette. The $333 million deal is expected to close in the third quarter.
Jun 29, 2021
Playboy is expanding its portfolio. On Tuesday, the men’s lifestyle firm revealed plans to acquire lingerie brand Honey Birdette for about $333 million USD in cash and stock in an attempt to grow parent company Plby Group’s lingerie and sexual wellness categories while building upon Honey Birdette’s sourcing and design capabilities.
“We are extremely excited to welcome Honey Birette to Plby Group,” Ben Kohn, chief executive officer of Plby Group, said in a statement. “We strongly believe in the power of brands and are thrilled by Honey Birdette’s potential to become a multibillion dollar luxury lifestyle franchise. I’ve been enormously impressed by Eloise [Monaghan, founder of Honey Birdette] and the rest of the Honey Birdette team and the organic, rapid growth they’ve driven.
“Our plan is twofold: to leveage Plby Group and the Playboy brand’s global operations to accelerate Honey Birdette’s expansion into new territories and product categories and to take advantage of Honey Birdette’s superior product design, sourcing and direct-to-consumer capabilities to accelerate our Playboy-branded lingerie, loungewear, swimwear and sexual wellness go-to-market plans targeting the masstige consumer,” Kohn continued. “This acquisition is expected to further our mission to become the leading pleasure and leisure lifestyle platform and our commitment to deliver long-term value to our shareholders.”
Australian lingerie brand Honey Birdette, wich was established in 2006, now sells in North America and Europe. The brand is anticipating about $73 million in revenues and roughly $28 million in earnings before interest, taxes, depreciation and amortization for the 12 months ending June 30. That’s 40 percent and 95 percent growth, year-over-year, respectively. The deal is expected to close in 2021’s third quarter.
Honey Birdette also plans to open new brick-and-mortar locations across the U.S., U.K. and Europe, including new stores in Dallas, Miami and New York this year. The brand will also add to its lingerie assortment with innerwear, loungewear and swimwear.
“When I founded Honey Birdette 15 years ago, my ambiion was to build a brand for women by women; a brand that would serve as a platform for confidence and sexual and body empowerment,” said Monaghan, who also serves as managing director of the brand. “I am immensely proud of everything we’ve accomplished, with 60 thriving stores across three countries, powered by 350 fierce female ambassadors. Today is a momentous and proud day for the Honey Birdette team as we enter into partnership with one of the world’s most iconic brands and the lifestyle platform it represents.”
Playboy, which went public earlier this year under the Plby Group, is in growth mode. The firm completed the $25 million acquisition of Lovers, a sexual wellness chain, in March. In addition, Plby Group acquired lingerie brand Yandy in December 2019.
Playboy is also trying to pivot away from its legacy as a man-centric magazine (Playboy’s print magazine ceased publication at the start of the pandemic after 66 years in circulation) rebranding itself, instead, as a consumer lifestyle business for men and women.
In April, Anna Ondaatje, vice president of global brand and franchise strategy at Playboy, told WWD that retail — including lingerie, swimwear and cosmetics — will account for more than 95 percent of total revenues in 2021.
Gores Group Picks Up Big Strike
Jun 1, 2011
After striking its first fashion deal for J.Mendel last year, the private equity firm is demonstrating an appetite for diverse apparel investments.
LOS ANGELES — After striking its first fashion deal for J.Mendel last year, private equity firm The Gores Group is demonstrating an appetite for diverse apparel investments with its newest pickup of moderately-priced wholesale specialist Big Strike Inc.
The Gores Group, which is based in Los Angeles not far from Big Strike’s headquarters in Gardena, Calif., has acquired a majority ownership in Big Strike for an undisclosed amount. Big Strike’s founders Lars Viklund, Jodi Sundberg, and Kevin Talbot will remain with the company, and Paula Schneider, formerly president of Warnaco Group Inc.’s swimwear division and president of Liz Claiborne Inc.-owned Laundry by Shelli Segal, will join them in Big Strikes’s management ranks as chief executive officer.
Jeff Schwartz, managing director of The Gores Group, said Big Strike has generated $100 million in annual revenues, and its three biggest retail customers are J.C. Penney, Sears and Kohl’s. Big Strike’s strength is affordable career tops in the juniors category under its largest brands Heart N Soul and Soulmates. The company also has branched into bottoms with the acquisition of J.C. Penney staple Tracy Evans out of bankruptcy. The average retail price for Big Strike’s brands is roughly $20.
“We identified Big Strike five months ago, and we were very impressed with their position in the market, their relationship with their customers and their process of bringing product to market that provided a very good price value,” said Schwartz. “We were very impressed with how they performed over the last few years in obviously a very difficult climate.”
Viklund, Big Strike’s president, said, “The Gores Group is an ideal partner to help take Big Strike to the next level. They have incredible strategic and operational capabilities, with access to an abundance of capital that can be used to support our anticipated growth. Together we will take advantages of the opportunities we see in our marketplace, and build the necessary infrastructure to capitalize on our full potential.” Big Strike was advised by The Sage Group LLC on the deal.
In each of the last three years, Schwartz said Big Strike posted double-digit sales growth, and he expected yearly double-digit sales increases to continue, if not accelerate, over the next few years. To boost its sales, he explained Big Strike would look to enter the missy category, expand its junior tops business and dive more heavily into bottoms. The Gores Group will address Big Strike’s infrastructure from technology to supply chain to design capabilities in order to ready the company for further sales growth.
“We believe we are at a nice inflection point from a size standpoint that if we are able to make a few acquisitions and continue the organic growth, we will have a substantially larger company,” said Schwartz.
“Once we get to $200 million, $300 million, $400 million in revenue, which we think is really very much achievable, that will put us at a whole new category for [exit] opportunities” such as an initial public offering or a sale to a strategic or financial player.
Schwartz said The Gores Group’s investment horizon is typically three to five years, but he added a caveat that the firm foresees Big Strike “being a longer rather than a shorter hold.” Funding for apparel and retail investments comes from The Gores Group’s third fund, Gores Capital Partners III L.P., that has $2 billion to put toward telecommunications, business services, industrial, health care and consumer sectors, including apparel and retail. In total, The Gores Group, founded by Alec E. Gores in 1987, has $4 billion in committed equity capital currently under management across companies as different as DVD, CD and video game distributor Alliance Entertainment and automotive body cloth maker Sage Automotive Interiors.
Over the next three years, Schwartz said The Gores Group anticipates acquiring another two to three companies in retail or apparel and could invest in companies registering up to $1 billion in annual revenues. Lewis “Lee” Bird, who The Gores Group brought on board earlier this year, will chair the boards of companies in The Gores Group’s retail and apparel portfolio. Bird was previously group president of Nike Inc.’s affiliate brands Bauer, Cole Haan, Converse, Hurley, Starter and Umbro, executive vice president of new business development at Gap Inc., and chief operating officer and chief financial officer of Old Navy.
At The Gores Group, Bird said his role is to be actively overseeing the companies in the apparel and retail space. “It is an operations-driven model,” he said. “Other private equity firms run a very different model where it is more financial engineering.”
L.A. Brand Rails Opens SoHo Store, Ups Fashion Offering
Dec 2, 2020
“We’re looking more in the d-to-c model for lessons on the future of fashion than what old-school brands have done,” said chief executive officer Jeff Abrams.
In 12 years, Rails brand founder Jeff Abrams turned $5,000 of bar mitzvah money into $500 million in total brand sales, thanks to the plaid rayon “Hunter” shirt with a cozy hand feel and a sexy fit that became popular in the mid-Aughts with Beyoncé, Jessica Alba, Gisele Bündchen and other celebrities.
Now, five million shirt sales later, the Vernon, Calif.-based brand is thinking bigger — opening retail stores, expanding its range of contemporary clothing encompassing knitwear, outerwear and dresses; men’s and soon, denim — all with the same soft touch.
“We are becoming a bigger brand in importance in the fashion space, but we still have a long way to go in growth potential,” said Abrams, who has been able to avoid furloughs and cuts for his 100 employees through the pandemic. “Customers finding our e-commerce and finding our product comfy and cozy struck a note through COVID-19….So we were able to get through better than those offering fancy, high-end outfitting.”
When COVID-19 hit, the brand, which is stocked globally in 1,500 retail doors, including premium department stores Nordstrom, Saks Fifth Avenue and Neiman Marcus, accelerated its digital transformation, registering a 200 percent increase in sales through its own e-commerce. “Wholesale used to be 95 percent of sales, but little by little we’ve been building e-comm,” Abrams said, adding that Instagram advertising, influencer marketing and adopting foreign currency exchange have all helped drive online sales to 20 percent of total revenue for 2020. “Next year we’re hoping to double our e-commerce again. We are hoping to have d-to-c be 40 percent of our business through e-comm and physical retail.”
Abrams is also pushing into brick-and-mortar, which he sees as a storytelling vehicle for the brand, which he named after his Eurorail adventures post-college and which has a SoCal/European casual vibe. (Brand ambassadors and new at-home catalogues have also been key.)
Rails opened its first brick-and-mortar store in New York’s SoHo this fall, a 2,500-square-foot California-meets-New York industrial space at 54 Greene Street where Abrams acknowledges traffic has been a bit low but enthusiasm high, particularly for the men’s wear offering.
The space has a clean design with concrete floors, high ceilings and soft neutral tones and is offering enhanced COVID-19-era services like virtual style consultations.
In the spring, the brand will hang a shingle in Hayes Valley in San Francisco, followed by a store in Austin and a pop-up in Paris. Abrams also has his eyes on Los Angeles, either Melrose Place or Abbot Kinney, for fall 2021. (The brand took on minority investment from private equity firms SK USA and Peterson Partners in 2018.)
In terms of product, while the volume of shirting sales has increased, the percentage of total revenue it represents has decreased as the brand has grown other categories. Men’s is also becoming a more important part of the business, with sales up 250 percent year-over-year.
While Vernon contemporary category competitor The Collected Group is leaning into basics to weather the pandemic storm, Rails sees newness as an essential component to growth, even now.
“When COVID-19 first happened, it was straight sweat sets, comfort work-from-home,” said Abrams. “As we got to fall, it was how to blend that comfort with something to wear out — a novelty sweatshirt with a silk skirt, for example.”
Rails never stopped sharpening its style offering. “Now we’re doing more fashion with puff sleeves and trucker jackets. It’s now more about full outfitting. Silk was an iteration we brought into the collection. While we’re in the contemporary market, we’re entry-level, so we were able to gain a lot of market share from people doing silk shirts for $250 to $300 where ours are $188 to $200,” he said.
“Sometimes it feels like there is an old-school playbook that a lot of brands built in the wholesale world to do the same cookie-cutter thing season after season. They build core and just replant, replant, replant, and then the customer says how many of the same top can I buy and it gets tired,” Abrams said. “Customers are looking for newness — the combination of trend and fashion and speed to market. We’re looking more in the d-to-c model for lessons on the future of fashion than what old-school brands have done.”
MeUndies Secures $40 Million Investment
Nov 23, 2020
The innerwear and loungewear brand plans to use the extra funds to grow its omnichannel operations and move into new markets, among other things.
Los Angeles-based innerwear and loungewear brand MeUndies has secured $40 million from Provenance, a growth equity investment firm also based in Los Angeles.
Jonathan Shokrian, founder and chief executive officer of MeUndies, in a statement pointed to Provenance’s “track record of success partnering with leading direct-to-consumer brands. Over the past nine years, we have worked hard to establish our incredibly loyal community of customers, who love our focus on inclusivity, our high-quality products, our approachable price point and our frequent and unique product drops. We have a well-established foundation and this investment and our relationship with Provenance will enable us to expand our MeUndies brand community into new markets and new channels.”
The men and women’s underwear brand, which has sold more than 16 million pairs of underwear since its inception in 2011, plans to use the extra funds to expand its design, production and distribution capabilities, invest in marketing and grow its omnichannel operations, including the possible addition of stores.
MeUndies opened an L.A. flagship, its first store, in 2018. The brand also operates an e-commerce business, meundies.com, selling products both à la carte and by way of a monthly subscription service.
The company has partnered with public figures, such as Pittsburgh Steelers wide-receiver JuJu Smith-Schuster, podcaster Joe Rogan, comedian Bill Burr and actor Dax Shepard, for various collections.
For the investment, MeUndies was advised by investment bank The Sage Group and law firm Cooley LLP, while Provenance was advised by Perkins Coie LLP, an international law firm.
“We are highly impressed with Jonathan Shokrian and his team and their proven ability to deliver on MeUndies’ growth strategy,” Anthony Choe, founder of Provenance, said. “The brand enjoys the highest customer loyalty of any company we’ve seen in any consumer category. MeUndies’ fun, creative print designs and affordable range of products resonate strongly with its core Millennial and Gen Z audience and the company’s ability to drive growth organically through its brand community is powerful. We’re excited to be copilots on this next phase of the brand’s journey and to support its continuing growth.”
Safilo Completes Majority Purchase of California DTC Eyewear Brand
Jun 1, 2020
Safilo has made a deep investment in digitally native label, Blenders Eyewear.
Safilo has completed its majority-share purchase of U.S.-based, digitally native brand Blenders Eyewear. The company first announced plans of its acquisition in December.
The label was founded in 2012 by San Diego-based surfer, Chase Fisher, and was inspired by his Southern California lifestyle. Safilo has taken a 70 percent stake in the label, with Fisher holding on to the remaining 30 percent and staying on as the brand’s chief executive officer, based in San Diego. Safilo says the overall cost of its shares in Blenders have cost the firm $63.9 million — financed by a 90 million euro loan extended by Safilo reference shareholder, Multibrands Italy B.V.
Blenders makes approximately 95 percent of its sales through direct channels and Fisher — who started the brand with $2,000 — says it has been profitable since inception. In 2019, the company marked $40.7 million in sales — a 30 percent gain over the previous year. Most of Blenders’ styles sell for under $60 and reflect a colorful, athletic mood.
Safilo has been struggling to maintain market share in the fallout from both Kering and LVMH Moët Hennessy Louis Vuitton’s establishment of vertical eyewear manufacturing firms — thus canceling blue-chip licenses with the Safilo group. In both 2018 and 2019, the company recorded millions in euro net losses.
In the fallout of LVMH’s establishment of Thélios — an eyewear company formed in joint partnership with Marcolin — Safilo doubled-down on its other licenses like Polaroid and Carrera. It also signed deals and courted the brands not held by larger conglomerates, including Levi’s and Missoni.
Safilo’s investment in Blenders might represent a new chapter in the company’s history, this one focused on digital strategy and youth outreach. For Blenders, it represents an opportunity to scale and expand digital operations.
Safilo ceo Angelo Trocchia said of the acquisition in a statement: “The closing of the Blenders acquisition represents a big leap forward for us on the 360-degree digital transformation strategy we presented in December last year and which we are now accelerating in all its three key components, from the launch of the latest technologies in the B2B and CRM fields to the strengthening of digital and social marketing capabilities, to the direct-to-consumer distribution.
He continued: “Blenders Eyewear is a compelling price-to-value eyewear proposition, a digitally native business model and a strong e-commerce pure player that goes to enrich our proprietary brands portfolio in a crucial moment for our group’s business development and for our industry’s evolution. We are working in difficult times, turning around our business in a challenging and fast-evolving marketplace and I am firmly convinced that a focused execution of our strategies will put our company in a stronger position, better equipped to meet our challenges head-on and to be frontrunners in some of the new business opportunities that lie ahead.”
Fisher said of the sale: “We are super excited to have finalized our union with Safilo, ready to progress faster than ever on our growth and development projects. The global pandemic’s lockdowns that we have been all suffering have undoubtedly elevated the importance of e-commerce and digital channels, also pushing new consumers to shop online for the very first time. We, at Blenders Eyewear, have seen and are experiencing this digital escalation. Our results were very solid in the first quarter of the year, with sales up more than 30 percent, and further accelerating in April and May.”
He continued: “Together with Safilo, we aim to continue scaling up our digital capabilities, constantly improving the customer journey and experience, alongside pioneering new ways of engaging with ever more demanding consumers, building profitable traffic and conversion.”
Lee Equity Acquires Skin-care Manufacturer Cosmetic Solutions
Oct 22, 2019
The deal follows several others in the beauty manufacturing space.
Lee Equity has acquired beauty manufacturing business Cosmetic Solutions for an undisclosed amount.
Cosmetic Solutions makes skin-care, hair-care and body-care products. The company offers either standard or custom formulations and handles manufacturing for more than 1,000 emerging and established brands. The company has a 95,000-square-foot research and development facility in Boca Raton, Fla.
The deal should allow Cosmetic Solutions to “meet the increasing market demand,” said Warren Becker, chief executive officer. In addition to formulation and manufacturing, the company provides packaging, creative design, marketing, education and delivery services. The Sage Group advised Cosmetic Solutions on the deal.
Lee Equity is a New York-based private equity firm that generally invests between $50 million and $100 million for a controlling stake in businesses. The firm also backs InterLuxe, a fashion and luxury brand platform.
In the beauty M&A world, manufacturing deals are becoming increasingly popular. In August, Elkem ASA said it would Basel Chemie for $26.9 million. Earlier this year, Bain Capital bought a majority stake in Maesa, the beauty incubator behind many retail private-label beauty lines as well as the Kristin Ess and Flower Beauty brands. Mana, a New York-based manufacturer, is also exploring potential sale options, the company confirmed to WWD.
Playboy Owner to Buy Honey Birdette for $333 Million
Jun 29, 2021
The owner of the Playboy brand is purchasing Australian luxury lingerie retailer, Honey Birdette for $333 million, according to a Wall Street Journal report.
Honey Birdette has a network of approximately 60 stores, mainly in Australia, but also some in the US and the UK. The company expects revenue of more than $73 million for the fiscal year that ends this month, representing growth of over 40 percent year-on-year.
Honey Birdette, which sells sex toys in addition to lingerie, has been the subject of controversy in Australia for its provocative marketing, which parents’ groups have described as “soft porn”.
Its approach is certainly different than the more inclusive messaging and diverse representations adopted by other global lingerie success stories of recent years, including Savage X Fenty and Aerie. Even Victoria’s Secret has had a rethink of its previously overt “sex sells” approach ahead of its pending spin-off from L Brands Inc.
Playboy went public last year after a special-purpose acquisition company, or SPAC, acquired it in a deal that valued the brand at $415 million.
In the past decade, Playboy has focused on earning money through licensing deals, placing its name and distinctive logo on clothing lines, nightclubs, casinos, fragrances and more. The purchase of Honey Birdette perhaps signals its intention to move beyond bunny ears into more extensive fashion brand building.
Safilo Acquires Californian Sunglasses Brand
Dec 9, 2019
The eyewear company has agreed to purchase 70 percent of Blenders Eyewear, in a deal estimated to be worth $90 million.
MILAN, Italy — Italy’s Safilo has agreed to buy 70 percent of Blenders Eyewear, looking to boost digital sales through a deal that values the US surf and ski sunglasses brand at $90 million.
Founded in San Diego in 2012 by surf instructor Chase Fisher, who will remain as chief executive and 30 percent shareholder, Blenders generates 95 percent of its turnover online and only recently opened its first brick-and-mortar store in San Diego.
E-commerce currently accounts for only 3 percent of Safilo’s total revenue, mostly from its existing US brand Smith.
“With the deal we intend to accelerate Safilo’s digital growth by learning from the great capabilities of the founder of this native-digital brand and from his team,” Safilo Chief Executive Angelo Trocchia said on Monday.
Safilo said the acquisition of its controlling 70 percent stake gave the US business a total valuation of $90 million and that the deal is expected to close in January, boosting group earnings from next year.
Blenders’ sales are expected to reach $42 million this year, up about 40 percent from 2018 and Mediobanca Securities analysts estimated the acquisition would add 4 percent to Safilo’s revenue.
Shares in Safilo retraced initial strong gains to end broadly flat ahead of the unveiling of a new business plan on Tuesday.
Safilo has been struggling to lift sales and profit after moves by big luxury groups such as Kering and LVMH to end licensing accords for key brands including Gucci and Dior, taking production in-house.
Monday’s deal strengthens Safilo’s brand portfolio, which is less exposed to the risks of the licensing business, as it contends with increasingly stiff competition.
Domestic rival Luxottica last year closed a merger with the world’s biggest lens manufacturer, Essilor, to create eyewear giant EssilorLuxottica.
Furthermore, Dior-owner LVMH has established a joint venture with Marcolin, another domestic competitor, to design and manufacture eyewear for its Celine brand, formerly licensed to Safilo.
Kering, meanwhile, set up its own eyewear business to better control distribution and pocket rich profit margins and turned the Gucci licence with Safilo into a production deal.
“It’s an interesting growth initiative, but in our opinion the main theme for the group is to manage the restructuring of its Italian manufacturing capacity (after the loss of the LVMH licences),” broker Equita wrote in a note.
The acquisition will be financed through available cash and credit facilities, including a 30 million euro ($33.1 million) loan from Safilo’s top investor, Dutch investment fund HAL Holding.
That loan was described by Trocchia as “a concrete sign of engagement from the main shareholder.”
The Reinvention of the Celebrity Hairstylist
Nov 10, 2018
A new wave of haircare gurus who are just as much at home on Instagram as the salon are driving booming sales for prestige hair products at beauty retailers like Sephora and Ulta.
NEW YORK, United States — Jen Atkin is about as famous as a hair stylist can get. Her clients include Kim Kardashian and Kaia Gerber, and she flies around the world with Kendall Jenner and Bella Hadid to ensure they remain perfectly coifed whether they’re out in Los Angeles or walking the runway during New York Fashion Week. She has 2.6 million followers on Instagram.
But when it came to choosing a name for her line of haircare products, she went with Ouai, a casual way of saying “yes” in French. In doing so, she broke with decades of tradition among celebrity stylists who have parlayed their salon success into retail via eponymous product lines, from Vidal Sassoon to Frédéric Fekkai.
“I didn’t put my name on the bottle because it’s not about me,” Atkin told BoF. “The brand is about the community that we have built and all of the consumers who are buying it.”
Atkin’s Ouai, which launched in 2016, is part of a new wave of prestige haircare products storming the beauty aisles at Sephora and Ulta. Brands like Briogeo and Olaplex are racking up sales through Instagram campaigns or the promise of new technology or ingredients (or all three). Even brands that rely on a famous name, like Oribe and Kristin Ess’s line for Target, promote their innovative formulas or winsome social-media presences rather than leaning on their founders’ aura.
The newcomers are taking advantage of a broader shift in consumers’ beauty tastes toward wellness – an emphasis on “clean” ingredients and scientific haircare regimens adapted from the booming skincare market. The elaborate, unattainable salon creations that used to sell haircare products are also falling out of favour, with women looking instead to mimic the simpler looks of their favourite influencer on Instagram. At Sephora, many hottest sellers were launched in the last five years, in some cases stealing market share from brands like Fekkai that enjoyed decades of success.
“It’s about these emerging brands that are socially relevant that are out there engaging with the consumer where the consumer is,” said Monica Arnaudo, senior vice president of merchandising for mass and hair at Ulta Beauty, which sold about $1.1 billion in haircare products in its most recent fiscal year. “Those are the brands that are winning … whether its prestige brands or celebrity stylists’ [lines] that are getting in front of the consumer that are being built up on Instagram.”
Many of the new brands fall into the prestige haircare category, where products tend to be sold in specialty stores and at a higher price point than mass brands like Pantene or Garnier. Haircare is the fastest growing sector in all of prestige beauty, with sales rising 11 percent last year to $582 million, according to The NPD Group. Growth is accelerating, with sales shooting up 27 percent in the third quarter of this year.
Retailers trace the new wave of haircare brands back to 2013, when blowdry chain DryBar introduced its product range and Nancy Twine, then a Goldman Sachs executive, launched Briogeo, a clean line of products infused with skincare ingredients. In 2014, Olaplex hit the scene with its patented bonding technology, touted as the “ultimate breakage insurance for damaged hair.”
Newcomers like Atkin and Ess, whose namesake line for Target launched last year, have made “accessibility” a core tenet of their brands, investing in e-commerce and interacting with customers on social media. Atkin, for example, often asks followers questions in Instagram Stories, puts up polls and tells people to direct message her. The Ouai Instagram account, which has 669,000 followers, account does the same.
“Jen [Atkin] has taught people how do it themselves — they’re simpler styles people can do on their own,” said Priya Venkatesh, senior vice president of merchandising, skincare and hair at Sephora, which carries Atkin’s line. “She’s done a remarkable job bringing something like hair styling to social media. No one was really doing it the way she’s doing it and she’s made it approachable.”
This week Atkin added four fragrances to her collection available in 60 Sephora doors and Sephora.com. This follows the appointment of chief executive Colin Walsh, formerly of Deva Curl, in September.
Ess’s line of 34 products expanded into Canada and the UK earlier this year and is on track to hit $100 million in retail sales next year, according to an individual familiar with the company. Ess co-owns Kristin Ess Hair with Maesa, a beauty firm that also manufacturers Drew Barrymore’s Flower brand. Forging a relationship with followers is critical for Ess, who started interacting with fans via her beauty tutorial website Beauty Department in 2011.
“As a consumer, can you reach out directly and get answers from Serge [Normant] or Frédéric [Fekkai]? There’s not a presence that way. The average person can’t reach out and get advice from that person,” she said. A spokesperson for Fekkai declined to comment. Normant did not respond to a request for comment via his Instagram account.
The trend toward “accessible” brands presents a challenge to brands launched by celebrity stylists, which had their heyday from the late 80s through the early 2000s. Once, a stylist like Fekkai or Oscar Blandi opened salons famous for their rosters of celebrity clients. This then led to formulating product lines, gaining traction at a retail level and eventually, an acquisition.
But many of these brands have seen their value decline as a new generation of stylists and influencers captured the public imagination. Fekkai’s brand sold to Procter & Gamble for over $400 million in 2008, but the consumer-goods giant sold it for $50 million in 2015. Fekkai is attempting to buy the brand from its current owners, Designer Parfums and Luxe Brands.
Blandi said his brand underwent a similar decline after he sold it to TPR Holdings, an investment company that owns Cargo Cosmetics and Mally Beauty.
“When it was bought, it was doing close to $10 million [in wholesale sales]. Right now the retail sales are less than $1 million. There’s no more Sephora, no more QVC,” he said. Currently, the line is sold at Walmart.com, Amazon, LovelySkin and Overstock.com.
TPR Holdings did not respond for comment.
Others from that generation have adapted to the new order. Tevya Finger runs Luxury Brand Partners, a beauty incubator that owns and operates IGK, Smith & Cult, V76 by Vaughn, In Common and R+Co. The firm’s first brand was Oribe Hair Care, which Finger and Daniel Kaner started with celebrity stylist Oribe Canales in 2008. It was sold to Kao USA Inc. in December 2017 for over $400 million, and had close to $100 million in annual retail sales at that time, Finger said.
He said “good old fashion elbow grease” kept Oribe relevant. This included a focus on teaching Canales’ styling philosophy to education teams that travelled to salons throughout to host classes, coupled with strong products in sexy packaging.
New owner Kao did not disclose current sales figures but a spokeswoman said that business “continues to show positive developments.”
As a consumer, can you reach out directly and get answers from Serge [Normant] or Frédéric [Fekkai]? There’s not a presence that way. The average person can’t reach out and get advice from that person.
R+Co was founded in 2012 by what Finger called an “old-school group” of stylists, including Thom Priano, Howard McLaren and Garren, whose celebrity haircare career started in the 1970s (Garren gave Canales his first job as his assistant). R+Co has grown by embracing social media and partnerships with retailers such as Kith and Fred Segal — and without putting any of the famous founders’ names on the label. The company will introduce a series of influencer-created capsule collections next year. Finger said R+Co is on track to hit $70 million in retail sales next year.
“Every brand [at Luxury Brand Partners] has to have an artist; it’s the secret sauce,” Finger said. “But what a stylist is has changed. It’s a new paradigm.”
Some new brands don’t have a stylist at the helm at all. Twine mainly stays behind the scenes at Briogeo, where she develops products that promise innovation, often inspired by trends in skincare. For example, Don’t Despair, Repair! Hair Mask Cap System is a two-step treatment that includes a dual layer cap that contains a “repair essence” inspired by sheet masks.
The collection, sold in about 280 Sephora stores worldwide, will enter all of the retailer’s US and Canada doors in February. The brand is also carried at Cult Beauty, Net-a-Porter, Nordstrom and Revolve and is on track to do $35 million in sales this year with plans to double that in 2019, Twine said.
Zahir Dossa, chief executive and co-founder of Function of Beauty, a direct-to-consumer haircare brand that sells customised shampoo and conditioner, said the emphasis needs to be on the actual product – not on the stylist behind the brand. Dossa, who has a doctorate degree from MIT in sustainable development, previously started a gourmet food cooperative.
Customers take a quiz to determine the right product for their hair out of 27 trillion possible ingredient combinations. Last weekend, the company said it sold its millionth bottle.
“If the focal point is not the products, any brand will get replaced by the next influencer-backed thing,” Dossa said. “That’s the story of celebrity backed brands — no person stays famous or lives forever.”
San Francisco Equity Partners acquires majority stake in beauty brand jane iredale
Jan 22, 2019
The terms of the deal have not been disclosed
Private equity company San Francisco Equity Partners (SFEP) has acquired a majority stake in skin-centric cosmetics brand jane iredale.
The namesake brand of British-born founder Jane Iredale first launched in Great Barrington, Massachusetts, US, 25 years ago with the aim of formulating cosmetics that had skin benefiting properties.
Today, its products are stocked in 37 countries across three continents.
SFEP currently partners with a handful of beauty brands, including skin care brand Yes To and colour cosmetics company Japonesque.
Together, the companies will work to strengthen and expand the brand’s outlets.
The terms of the deal have not been disclosed.
“Starting with a modest idea – to create a make-up products that was good for the skin – it’s been an amazing 25-year journey,” said Iredale. “To take the company to the next level, I knew we needed a partner with a proven track record in beauty who would be a good steward to our brand and company.” She continued: “Based on their experience working with leading authentic natural brands, SFEP is the ideal partner to guide us through the next phase.”
Meanwhile, Scott Potter, Managing Director of SFEP said: “As we have worked with Jane and her team, we have developed a strong appreciation for the quality and authenticity of the jane iredale brand, the strength of the company and its Great Barrington (Massachusetts, US) roots. “This is a brand with uniquely strong products and unsurpassed consumer loyalty,” he added. “We are thrilled to be chosen by Jane to help guide the brand to new heights.”
The Sage Group served as a financial advisor to the cult US brand through the transaction and described the partnership as “perfect”.
MidOcean Partners acquires millennial focused make-up brand BH Cosmetics
Jan 11, 2018
The digitally native colour cosmetics brand will use the private equity company’s investment to further its global growth and expansion
MidOcean Partners, the US-based private equity company, has acquired colour cosmetics brand BH Cosmetics, continuing its long term focus on investment in the beauty sector.
Targeting millennial consumers, LA-based BH Cosmetics (BH) offers a full range of colour cosmetics including eye, face, lip and skin care products, as well as brushes and accessories.
It plans to use the investment from MidOcean to expand its growth in current and new markets, with the help of MidOcean’s operating resources.
Fred Sadovskiy, BH co-founder and CEO, said: “We are very excited to begin our partnership with MidOcean.
“MidOcean has tremendous resources and experience building branded consumer products platforms and has a proven track record of helping take founder-led consumer businesses to the next level.
“We are confident that MidOcean will be an excellent partner for BH as we look to continue BH’s expansion in the colour cosmetics market.”
Sadovskiy will continue in his role as CEO at BH, alongside co-founder and COO Robert Sefaradi and Chief Strategy Officer Kirill Trachtenberg.
Jonathan Marlow, Managing Director at MidOcean, added: “We are incredibly excited to partner with BH, a leading colour cosmetics brand with a strong direct-to-consumer and digital marketing business model and multiple levers for continued growth.
“We believe that BH Cosmetics has substantial opportunities for continued growth and expansion fueled by appropriate investments in people, infrastructure and marketing.”
Financial terms of the deal were not disclosed, although BH confirmed that its founders will retain a significant ownership stake in the company.
Kao USA to acquire Oribe
Dec 22, 2017
Luxury Brand Partners known for its artist driven brands parts with luxury haircare specialist
Kao USA has announced it will acquire Oribe from its current owners which include Luxury Brand Partners LLC. Oribe will join the Kao Salon Division portfolio of professional brands, including Goldwell, a full service line of stylist exclusive, premium hair products designed for professional needs, and the KMS® line of globally inspired hair care and styling products for creative stylists and their clients.
“Oribe is a stellar brand and a perfect fit for the Kao Salon Division portfolio,” said Cory Couts, Global President, Kao Salon Division. “And Daniel will be an exciting and inspiring addition to our management team. Daniel’s appointment not only guarantees the continuity of all that is extraordinary about Oribe but is also a progression of our company’s mission to appeal to the most artistic and business‐minded salon professionals in the world.”
With its focus on luxury products, Oribe will meet the need for a prestige line in the Kao Salon product mix.
Daniel Kaner, co-founder and currently co-president of Oribe Hair Care will be named president of the newly acquired entity. The Oribe business will continue to be based in New York City under current management, reporting to Kao Salon Division. The terms of the deal were not disclosed although some estimates put the deal value in the region of USD 400m.
Estée Lauder to acquire Glamglow
Jan 5, 2015
Esteé Lauder is buying Hollywood skin care brand Glamglow
Esteé Lauder is to acquire Hollywood skin care brand Glamglow, with the deal expected to close this month. Financial terms have not been disclosed.
Founded in 2010 by Glenn and Shannon Dellimore, the skin care brand offers a collection of treatment masks and has a presence in global specialty-multi channels including Sephora and Douglas, and in select department stores, such as Neiman Marcus, Selfridges, Harvey Nichols and Bloomingdale’s.
“Glamglow represents the ultimate in innovative facial masks. It is a top performer in specialty channels and effectively engages its devoted fans across digital platforms. Its unique focus on facial masks strategically complements our current prestige skin care offerings, and we are thrilled to welcome Glenn and Shannon to our company,” said Fabrizio Freda, President and Chief Executive Officer of The Estée Lauder Companies, of the acquisition.
“The Estée Lauder Companies embraces our brand philosophy that skin care can be sexy, innovative and fun,” said brand co-founders Glenn and Shannon Dellimore. “The Company has the scale and vision to help bring the brand to its next phase of growth while remaining true to the identity that we’ve worked so hard to build. Having personally grown our brand every step of the way, we could not imagine a better home for Glamglow.”
The brand will be overseen by John Demsey, Estée Lauder Companies Group President, who is also responsible for Estée Lauder, MAC, Tom Ford, Prescriptives, Bobbi Brown, Bumble and bumble, Jo Malone, Crème de la Mer, Smashbox, Aramis & Designer Fragrance brands, Le Labo, and RODIN olio lusso.
The current Glamglow line includes five mud-based facial skin masks, and this month the brand will launch a new range of mud-to-foam daily cleansers.
San Francisco Equity Partners acquires majority stake in Jane Iredale
Jan 22, 2019
San Francisco Equity Partners (SFEP) has acquired a majority stake in skincare company Jane Iredale.
SFEP will now partner with founder Jane Iredale and her management team as the holistic makeup and skincare company continues its growth efforts.
Since its inception nearly 25 years ago, Jane Iredale has focused on developing products using minerals, organic botanicals and other natural ingredients that purportedly benefit the skin. According to the company, products are free of synthetic preservatives and other chemicals while still providing long-lasting care.
The skincare company is headquartered in Great Barrington, Massachusetts, and its products are currently available online, in specialty retail stores and in over 50 countries worldwide. In addition, the brand is also used by professionals such as aestheticians, dermatologists, plastic surgeons, professional spas and salons.
“To take the company to the next level, I knew we needed a partner with a proven track record in beauty who would be a good steward to our brand and company,” said Jane Iredale in a press release. “Based on their experience working with leading authentic natural brands, SFEP is the ideal partner to guide us through the next phase.
San Francisco Equity Partners, a private equity firm focused on expansion-stage companies in the consumer sector, counts skincare brand Yes To, cosmetics label Japonesque, and home care brand Method Products among its partner companies.
Terms of the deal between SFEP and Jane Iredale were not disclosed.
Kao to acquire Oribe Hair Care from Luxury Brand Partners
Dec 20, 2017
Kao USA Inc., a wholly owned subsidiary of Kao Corporation, will acquire prestige beauty line Oribe Hair Care from Luxury Brand Partners, integrating it into the Kao Salons Division brand portfolio.
Originally a hair care brand, Oribe has expanded its product range to include skincare and makeup products – Kao USA, Inc.
Kao USA Inc. (Kao) will appoint Oribe Hair Care (Oribe) co-founder and current president, Daniel Kaner, as president of the newly acquired entity. Kaner will be tasked will positioning Oribe for growth in salons globally. Kao has an existing distribution network through its Kao Salons Division which will serve as the infrastructure for expanding Oribe’s distribution.
Cory Couts, Global President, Kao Salon Division, said Kaner’s appointment will guarantee continuity for the brand. Couts added that it “is also a progression of our company’s mission to appeal to the most artistic and business‐minded salon professionals in the world.”
For his part, Kaner stated that Oribe has “always believed that hair care should be an immersive and luxury experience.” He said Kao supports the brand’s vision which will help lead international growth.
Oribe was originally founded as a hair care product line but the brand has since grown to include skincare, body care, makeup, tools and accessories, all of which are sold by top-tier salon professionals and specialty retailers.
The brand will continue to be based in New York City and will report to Kao through its current management. Financial terms of the acquisition, which is conditional on normal regulatory review, were not disclosed.
Once the acquisition is complete, Oribe will join other Kao beauty brands including Goldwell and KMS brands.
Lion Capital acquires majority stake in Paige Denim
Oct 9, 2017
California-based denim label Paige announced this week that investment firm Lion Capital acquired a majority stake in the company on September 14 from TSG Consumer Partners. The details of the transaction have not been disclosed.
Paige hired UBS in 2015 to explore a sale of the company that was expected to be valued at $400 million. Lion Capital’s purchase makes Paige one of many fashion labels and companies that the firm has invested in, including American Apparel, Jimmy Choo, John Varvatos, AllSaints, Alex and Ani and Buscemi among others.
Prior to the investment, Paige opened new retail locations in Brentwood in Los Angeles, Malibu Country Mart, and Austin, TX. The new stores increase the label’s number of retail locations to 8, joining stores in New York City, San Francisco, and Los Angeles.
Japanese apparel company acquires LA casualwear label Velvet in $37m deal
Apr 3, 2017
Japanese apparel company Adastria announced that it will acquire the LA-based casualwear company Velvet, LLC through subsidiary company Adastria USA, Inc. on April 3, for 37 million dollars (about 4,144 million yen). The Japanese group, which operates 21 brands across Asia, is targeting the North American market with its second investment in the country.
“Velvet will provide a solid platform for Adastria, allowing the company to expand its presence in the North American Market,” said Velvet CEO Henry Hirschowitz. “Furthermore, with Adastria’s knowledge in retail and online, we feel strongly that further opportunities for Velvet will materialize. Through the investment, Adastria is targeting the North American apparel market due to positive predictions for future growth.”
In addition to having eight directly-operated stores in the United States and one in the UK, Velvet by Graham and Spencer apparel is also sold in department stores and select shops in the United States and abroad.
“”This latest acquisition allows us to establish a strategic presence in North America and in the world of contemporary fashion, as we seek to transform Adastria into a leading global apparel company,” Adastria COO Masa Matsushita said. “Working together with Velvet’s management team, we will accelerate the brand’s growth, especially in the direct-to consumer channels.”
Adastria also plans to further develop its global brand portfolio through Marine Layer, a San Francisco-headquartered apparel label in which Velvet acquired a minority stake in April 2016.
- - Meet The Stanford Bros Conquering Men’s Shorts: Inside The Frat-Empire Of Chubbies
- - This Online Underwear Brand Is Raising $40 Million. It’s Not For Instagram Ads.
- - This Startup Just Sold For $130 Million, Founders Provide Insights On Almost Failing Ten Times
- - Rails: How A Fashion Outsider Created A Global Lifestyle Brand
- - Does Kao’s Acquisition of Oribe Take The Luxury Out Of The Brand?
- - Bain Deal Makes TOMS Shoes Founder Blake Mycoskie A $300 Million Man
Meet The Stanford Bros Conquering Men’s Shorts: Inside The Frat-Empire Of Chubbies
May 6, 2014
It was 26 degrees outside when Rainer Castillo and Kyle Hency stopped by the Forbes offices in New York in March. Oblivious to the lingering Northeastern winter, they showed up in shorts.
Sporting bare thighs in sub-freezing temperatures is an occupational hazard for the duo, who make up half the founding team of Chubbies, a San Francisco-based online clothing brand that hawks a roster of shorts and swim trunks for men. The company’s 126 different designs—which include items like the Pina Quadlatas and the ‘MERICAs—all keep to a very short, old-school 5.5” inseam. Its sworn enemies are cargo shorts, “the only form of contraception that is 100% effective,” and pants, “a necessary evil built for the work week.”
That kind of web copy, and the company’s unabashedly fratty branding, has earned Chubbies legions of loyal customers, including 590,000 Facebook fans. Even former President George W. Bush (Delta Kappa Epsilon, Phi chapter, Yale 68′) owns a pair.
All of this has translated into undisclosed millions in annual sales for the company. Though they declined to reveal exact figures, the founders say that 2013 sales more than tripled those of 2012. During one day in March last year, the company sold 10,000 pairs of ‘Mericas alone. (At $60 a pop, that’s $600,000 in sales…in one day.) The company declined to comment meaningfully on 2014 projections.
As befits the Bay Area’s frattiest company, there is no CEO of Chubbies. Instead the four founders, which include Castillo and Hency’s Stanford classmates Tom Montgomery and Preston Rutherford, run the company via a “quadfecta of management excellence.” Even without adult supervision–the company raised its first round of venture funding only three weeks ago—it’s a formula that’s worked surprisingly well to date.
Chubbies traces its roots back to a July trip to Lake Tahoe in 2011. “Culturally at Stanford, we would wear costumes and just get outrageous, anywhere we’d go,” says Castillo, a large, lumberjack-looking dude with a long beard and shaved head. That culture continued through the foursome’s post-grad years, often culminating in an annual Independence Day celebration.
In 2011, they decided to put some extra effort into their holiday attire. Castillo raided a local fabric store for red, white and blue patterns, then put together an ensemble for a group of friends heading to Tahoe. It included Hawaiian shirts, fanny packs, mullets and, of course, shorts.
The shorts that year were basically early versions of the company’s America-themed designs, with one featuring a blue and white star pattern, and another featuring red fabric and a star-patterned back pocket.
Expecting the shorts to be a hit, they made around 20 extra pairs and carried them in backpacks during the vacation. “Basically anywhere people saw us, they were trying to grab them,” remembers Montgomery. Over the course of four days, they sold every last pair to fellow partiers for $50 each.
They were clearly onto something. In the weeks that followed, the four met casually in the Marina District to talk about creating a business to sell upgraded versions of the Tahoe designs. Their combined skill sets meshed nicely for an online retail operation.
Castillo spent four years at Gap Inc., eventually managing men’s lines that included pants and shorts, before moving to a product development role at Levi’s. Hency, who graduated Stanford with Castillo in 2007, worked as an analyst covering e-commerce and Internet companies for Lazarde, then took a private equity gig with Mainsail Partners. Montgomery spent his days as an associate at IDG Ventures while Rutherford lead business development and product teams at Cooliris, a software company that developed the default photo app for Android.
That summer, Castillo scoured the state for local manufacturers to refine his prototypes, eventually eating through $5,000 after tweaking the design three times. In August they threw an open bar launch party that included a table full of shorts for sale. They easily sold out. The next month they made a couple hundred more and put them up on a website. Those too sold out within days.
Then came winter. A line of corduroy and dry-clean-only wool designs didn’t sell quite as well as the team hoped. Montgomery quit his job to work on the company full-time that October. Castillo followed in January and the team regrouped for a Spring surge.
They recruited 25 college ambassadors by sending out emails to fraternity presidents across the south. Even without shorts available on the site, they ended up building a hungry audience as college kids latched on to the company’s marketing copy, a style originally created to crack up the founders’ friends.
When they finally debuted a Spring line with a couple hundred pairs of shorts that March, they sold out within hours. “We had acquired a ton of audience and didn’t have any product on the site. So once we got product we just blew out of it,” remembers Montgomery. Fed up with selling out so quickly, they decided to make one huge batch to last through the summer. When that batch, intended to cover the company for a couple of months, debuted in March, it too sold out in hours.
That year they went through dozens of small product cycles, making hundreds, then thousands of shorts, posting them online and selling out in hours. They turned to presales to make due, warning customers that their orders wouldn’t ship for six weeks.
“Bascially we were sold out all year through 2012,” laughs Montgomery. Speculators, meanwhile, took advantage of the shortage by selling the shorts on eBay for hundreds of dollars. (This still happens.)
Rutherford joined full-time that March, while Hency came on board in October 2012. They used a $350,000 SBA loan to fund much of the business, and raised a small amount of seed funding–less than $50k–from friends and family. By the end of 2012 the company had 12 full-time employees in a warehouse outside of San Francisco.
Chubbies produces all of its shorts domestically, a product of its scrappy early days. The “Made in the U.S.” moniker also plays well with its male customer base. Getting that domestic supply chain–which includes two cutting facilities, eight sewing partners and a handful of fabric vendors–in order has taken more than two years. The company couldn’t even consistently meet demand until the end of 2013.
“Now we’re at a place where we could be a $70-$100 million business, just with the supply chain we have,” says Hency.
Chubbies now has 30 employees in San Francisco, along with 125 college ambassadors. They generally release 3-6 new styles each week, with some sticking around longer than others. Why the breakneck design schedule? “We want to be the shorts authority,” explains Castillo. “We want to have the coolest new stuff on the market and always offer cutting edge new ideas.” That ethos has produced an eclectic range of designs, including tie-dye shorts, sport utility shorts and a pair made from tuxedo fabric.
As the founders scale up the shorts business, they’re also broadening their ambitions. “We’re looking to do something on the 20-year-plus horizon,” says Castillo. Soon, they hope to expand to other product lines, but not before a long, careful design process. Though the company has offered promotional tank tops, croakies and koozies before, they want to get everything right before wading into non-shorts territory.
“We will make sure,” declares Castillo, “that when there’s a Chubbies shirt offered, it’s the most ridiculous thing they’ve ever seen and our customers will snap it up immediately.”
This Online Underwear Brand Is Raising $40 Million. It’s Not For Instagram Ads.
Nov 23, 2020
Los Angeles-based underwear company MeUndies, known for its bold prints, introduces a new pattern every week.
Unlike so many of today’s direct-to-consumer brands, Jonathan Shokrian has largely resisted the temptation to raise piles of cash to fund hypergrowth at his online underwear company MeUndies. “It sets investors and companies up for a lot of unneeded pressure,” says Shokrian, founder and CEO.
Instead, the Los Angeles-based company has kept its funding to a minimum, raising just $10 million since inception nearly a decade ago and funding growth primarily via its own cash flow and a credit facility. It has been profitable for the last five years and sales are projected to hit nearly $100 million this year, up from about $75 million in 2019.
So he can explain why he’s raising $40 million now: It’s all secondary capital to give his earliest investors their money back, some of which have been waiting patiently since 2011. None of it will be funneled into the business. The capital will be put up by Provenance, a Beverly Hills investment group focused on direct-to-consumer companies, which will come on as a new investor.
It’s a far cry from the direct-to-consumer companies that have raised capital at a breakneck speed, in part to keep up with customer acquisition costs that continue to rise. Building a business that relies heavily on Instagram hasn’t yielded the easy profits many expected, which is why so many have turned to brick and mortar.
Provenance will help MeUndies with just that, focusing on wholesale partnerships with department stores like Nordstrom and other specialty and big-box retailers. It eventually plans to open more of its own stores, too, in addition to the one it operates in Los Angeles.
“We always had plans to expand into retail,” says Shokrian, who adds that the nation’s largest mall owner, Simon Property Group, was one of its largest investors in its last funding round in 2018.
Shokrian started MeUndies in 2011 after inadvertently buying the wrong pair of Calvin Klein underwear at Macy’s before heading on vacation, and complaining about the fit. He realized he always had something of an inferiority complex buying underwear, since he was never going to have a six-pack like the models on the packaging. Shokrian had even been to prison for about seven months — for an asbestos issue related to a building he had managed for his dad at age 23 — where he worked out almost every day and still didn’t get a six pack.
So he started selling underwear with fun, bold prints — Pandas! Platypuses! Harry Potter! — online and offering a discount to those who signed up for a monthly subscription. To keep customers coming back, he introduced one new pattern a week. The average member is between the age of 25 and 35 and has 18 pairs of underwear, while some 40,000 superfans have accumulated over 50 pairs.
That makes for the highest customer loyalty of any company he’s ever come across, says Anthony Choe, founder of Provenance. “They are systematically replacing their entire underwear drawer over time with MeUndies,” he notes.
The company just sold its 16 millionth pair of underwear, nearly a quarter of which were purchased this year. Newer categories have taken off during the work-from-home era, too, like loungewear (up 100%) and bralettes (up 75%).
This Startup Just Sold For $130 Million, Founders Provide Insights On Almost Failing Ten Times
Jul 26, 2019
When asked which attribute serves entrepreneurs well, I often reply, “curiosity.” Well, curiosity served the two founders of Pura Vida well. Last month, Vera Bradley, Inc., a leading American bag and luggage company and iconic lifestyle brand, announced it had signed a definitive agreement to acquire a 75% interest in Pura Vida Bracelets. The deal might ultimately total $130 million.
I recently sat down with Griffin Thall and Paul Goodman, Pura Vida founders, to get more insight into their entrepreneurial journey. For full disclosure, Griffin worked in the Lavin Entrepreneurship Center at San Diego State University as a student on marketing projects and I subsequently met Paul once they started the company. I prepared a list of questions and these are their unscripted answers.
Did you have pressure as your college graduation approached to just get a job?
We definitely had pressure to find a “real job” once school ended as our parents were no longer paying for our housing or education. With that said, it forced us to think outside the box (we really dd not want corporate jobs) and that’s exactly what happened when we picked up these string bracelets in Costa Rica during the summer of 2010.
Did either one of you think you might be an entrepreneur while you were attending college?
Yes. While in still in school, I ran a successful eBay business out of my high school bedroom, college dorm room, and fraternity room as well. In high school, Paul worked with the local realtors and put up their open house signs all around town for a flat fee. So we were always hustling.
What led to starting Pura Vida and when did you believe it could be a real company?
We started Pura Vida while on a college graduation trip in Costa Rica where we met two bracelet artisans on the beach named Jorge and Joaquin. The second we picked up one of their handmade bracelets, a light bulb went off in both of our heads. “We can help these guys sell more bracelets by bringing the bracelets back to San Diego and selling them to our friends!”
What were some little or big mistakes you made in the first six months?
In the first six months, we had no idea how to properly fulfill orders or manage inventory. With that said, we would constantly go out of stock for weeks or months at a time which really hurt our sales and momentum. It almost killed the company several times.
Did either of you understand the good and bad of cash flow?
Paul was a finance major at SDSU, so he definitely had a better idea on cash flow than I did. But for me, I had no idea about cash flow other than the fact that we needed to have enough cash on hand to pay for rent, staff, and more bracelets. In the first two years, every bit of cash went back into the company.
What did you learn about technology in terms of scaling the company?
In terms of technology, we initially built an ecommerce website with a developer and at one point we were really struggling. Then we found out about Shopify about two years into our business journey and it changed our brand for the better in every way possible. It’s cost effective, scalable, and most of all, the entire staff knows how to use it with very little teaching.
How did both of you decide on roles and responsibilities regarding who would do what at Pura Vida?
We decided this pretty much on day one. I graduated from SDSU in Business Marketing and Paul graduated with Business Finance. It was very easy for us to divide and conquer from that point.
You never took on any equity investors for Pura Vida? Why?
We never took on any investors because we started and ran the company as lean as you could. So we never needed an investment. We were profitable from day one and had a goal to take this company to over $100M+ in valuation. We just had to learn how to manage our cash flow, really understand social media marketing and order inventory correctly.
At what point did building the company become hard, like work?
We would say it’s always been a consistent challenge, every single day. There is no point in time it just “got hard” because every week, Paul and I would make a list of tasks we wanted to accomplish that week and we just made that list a priority. We never really watched the hours we worked, we just focused on our task list. Never leaving even one task to spill over to the next week.
Ever think of selling the company in the first five years? Why did you sell it now?
No, we actually never talked about selling any part of the company or taking on investors in the first five years. As we started to scale over the past few years, we’ve been getting hit up by tons of private equity companies, so that’s when we started to explore our options and get a true business valuation. We sold a majority of the company because we were looking for a strategic partner to help us scale Pura Vida to the next level.
At what point did you realize Pura Vida could become bigger than bracelets, meaning it could become a brand?
We realized Pura Vida could be more than just bracelets and become a fashion brand when we released our “Wave Ring” on Instagram. Our fan base went nuts and the ad we put out went viral. We were acquiring customers at such a little cost that it opened our brand up to a whole new category, which is now over 30% of our business – jewelry.
Ever have any major fallouts between the founders? How did you handle it?
Paul and I are both very level headed inside the office. We respect and trust each other and that allows us both to stay in our lanes and make decisions accordingly. After talking to many other founders and businesses, we am proud to say that we have a very strong business relationship. And we actually like each other.
What final bit of advice would you have to aspiring entrepreneurs?
Put your head down and get to work. Don’t let other people tell you your idea is bad or not creative enough. Focus on a big market and keep your eye on the prize because YOU are the only one that can make your dream a reality
Rails: How A Fashion Outsider Created A Global Lifestyle Brand
Mar 7, 2019
Jeff Abrams didn’t have a background in fashion. But that didn’t stop him from pursuing his passion. It all started in 2008 with a single black hat with the word “Rails” sewn onto it that Abrams sold door-to-door. Fast-forward to today and LA-based Rails has become a global lifestyle brand for women, men, and children that’s sold in more than fifty countries by more then fifteen hundred retailers including Saks Fifth Avenue, Neiman Marcus, Shopbop, Selfridges, Harrods, among many others, and has generated more then $350 million dollars in sales to date.
“I started Rails in 2008 with no technical background in fashion. It was really in my twenties travelling across Europe where I began to conceptualize what would become the Rails collection. I envisioned a brand that blended the refined global aesthetic I found abroad with the innate effortlessness of the Southern California lifestyle. I had no previous experience or family tie to the fashion industry, so I had to blaze my own trail. I was looking for a way to jumpstart the brand, while I learned the ins and outs of designing a full collection. I sewed the word Rails onto a single black hat and walked into stores unannounced trying to get orders. I got into Fred Segal and the hat quickly sold out, but I knew I needed to evolve beyond a single item. The collection began with a limited unisex offering, but I quickly transitioned into shirting—something I knew could be an enduring category. I made a luxe cashmere-like fabric that was something unique to the market, and felt like nothing else available. This catapulted us into premium contemporary retail stores, even before we had any meaningful infrastructure,” Abrams, who graduated from University of California Berkeley with a political science degree, tells me.
Abrams, continues, “I think it was my naïveté of the industry that allowed me to embark on the journey with no inhibitions. What I lacked in industry experience, I made up through vision and perseverance. I always focused on finding the balance between effortless and accessible, without getting mired in the “traditional” fashion process. And I never let any setback slow me down. When I first began, I really had no idea how to actually produce a full collection. It was a journey of trial and error that led me through the initial stages of building the brand. I drove all over the United States, walking into stores unannounced trying to build the foundations for the Rails collection. I came back to Los Angeles and employed the same concept learning the business of fashion, walking into factories and suppliers, staying late nights at sewing facilities to understand the details of garment construction and the process of assembly.”
Rails began with a modest personal investment from Abrams. “I started with $5000 I had saved through various jobs, and was working out of my apartment. I woke up at 6am, traded stocks (semi-unsuccessfully) until 1pm and then went downtown to figure out how to make clothes. I bought a handful of hats and made a few garments, sold them, reinvested the money, and kept reinvesting my earnings in the business. In ten years we’ve never borrowed any money. We’ve funded our growth through disciplined investment in product and distribution, keeping our operations efficient without sacrificing amazing quality”, Abrams tells me.
Abrams attributes his early success to an organic celebrity following, Abrams continues, “One of the most important elements of Rails’ initial success was the incredible celebrity following we built early on. We quickly had people like Kate Moss, Gisele Bundchen, Jessica Alba, Matthew McCaugnahey, and Leonardo di Caprio in Rails, which was amazing to help launch our brand into the market. But this celebrity following has been very organic. We’ve never paid anyone to wear any of our products. Instead they are wearing the collection because they genuinely love it, and customers who see this recognize it as authentic.”
One of the distinguishing characteristics of the brand is the “handfeel”—specifically with their iconic button downs. “I wanted to build the collection based on timeless, seasonless styles, and knew it needed to strike an emotional chord with customers. I developed a new tencel fabric blend that felt almost like cashmere, and like nothing else in the contemporary shirting market. We applied this concept to plaids, denims, solids, and prints, focusing on becoming experts on both fit and feel. Luxe handfeel has become the brand’s cornerstone and we continue to launch new categories with this brand ethos in mind. From ideation to execution, our design process is very hands-on. We start with our color and trend inspiration, pulling from our international travels or local flea market finds. We then create our patterns—whether traditional plaid tartans, stripe color ways, prints or classic solids. We hand design each color combination into these fabrics and have swatches produced for review. Many of our colors go through 3-4 versions before finalizing the perfect pattern and shade. Our fabric is run through multiple wash processes to give it the drape and luxe handfeel we’ve become known for”, states Abrams.
Although Rails started with women’s, the brand launched their men’s collection and Little Rails (their kid’s collection) in 2014. Abrams tells me, “For many years, our Women’s collection has been the focus of our business. Each season I refine the creative direction and focus on creating versatile pieces in luxe fabrications that represent the effortless Southern California lifestyle. With this brand ethos in mind, we’ve slowly introduced new categories including knitwear, jersey, dresses, outerwear, silks and luxe loungewear—effortless staples that weave into our customer’s everyday. With shirting as a core category, menswear was a very natural brand evolution, and a huge growth opportunity for Rails. We’re mirroring certain fabric concepts from our Women’s collection to the assortment, which includes outerwear, trousers, tees and lightweight jackets. We are partnering with a focused number of specialty retailers for our rollout and anticipate a steady growth of our Men’s business this year. Little Rails is off to a great start, and we’re capitalizing on the mommy and me demographic. Our brand loyal women’s customer is cross-shopping in these categories and outfitting her family in Rails.”
As an outsider to fashion who seems to have cracked the success code regardless of his background, I wanted to know if Abrams had any words of wisdom for other entrepreneurs looking to blaze their own trails. Abrams responds, “There is no guidebook for creating a successful fashion brand. You need to follow your creative instincts, try not to be everything to everyone and be innovative in a way that’s marketable. There are always challenges that arise and you need to be thick skinned and resilient. I can’t tell you how many setbacks I’ve experienced—you have to maintain the drive and determination that no one is going to stop you and you will be successful! There’s no fast track to success. It takes hard work.”
Rails offers the perfect mix of style and comfort and it epitomizes the California lifestyle. It’s easy to wear, well constructed, and offers pieces that are both classic and on trend. When I ask Abrams if he has anything new on the horizons he tells me, “Our first focus is always on product, and continuing to build out our women’s, men’s, and Little Rails businesses. We are planning to launch a pop up at The Grove in Los Angeles for the month of April where we we’ll be showcasing our spring collection in a custom designed space. It’s our first foray into brick and mortar. Our first flagship store will open in Los Angeles in fall of this year, with additional stores in other key cities thereafter. Stay tuned for amazing things to come!”
Does Kao’s Acquisition of Oribe Take The Luxury Out Of The Brand?
Dec 20, 2017
“The writing’s been on the wall,” said Nicole Giannini, owner of Siren Salon & Apothecary, an upscale hair salon in wealthy Marin County, a suburb of San Francisco. “When I saw Oribe on Amazon and Costco I knew something like this was coming.”
“Something like this” is in reference to the announcement this morning that Kao USA, a manufacturer of professional hair care brands like Goldwell and KMS, will acquire Oribe Hair Care, Inc. According to an article in WWD, terms of the deal were not disclosed, but industry sources estimated Kao will pay between $400 million and $430 million for the brand. Sources estimated Oribe has between $85 million and $100 million in sales, with $30 million in earnings before interest, taxes, depreciation and amortization.
Founded by famed hairstylist Oribe Canales with Daniel Kaner and Tevya Finger of Luxury Brand Partners, Oribe hair care has been a backstage staple at fashion week and a celebrity favorite for its high-performance products. The brand is primarily carried at prestige salons like Giannini’s Siren Salon, but is also carried at luxury retailers Neiman Marcus and Space NK.
So how does a luxury brand remain “luxury” when a mass distributor purchases it? Giannini, who has been carrying Oribe since 2010, is hopeful yet cautious. “Until recently you could tell it was an artist-driven brand. In the beginning there was a white-glove focus on accounts like mine and it really felt like they were taking our input and integrating it into the products. I’m really hoping this acquisition will mean a stronger focus on just hair care so they can return to that level of client service.”
Cory Couts, global president of Kao’s salon division, explained in WWD that he doesn’t want to lose customers like Giannini. “[We want to] grow the brand without diminishing the exclusivity of the brand,” Couts said. “We don’t want to dilute the brand equity, we don’t want to sell it outside of the types of salons it’s selling in now…That means in terms of growth, we have to look to international markets.”
The Oribe business will continue to be based in New York City under current management, reporting to Kao Salon Division.
Bain Deal Makes TOMS Shoes Founder Blake Mycoskie A $300 Million Man
Aug 20, 2014
Blake Mycoskie’s TOMS business card reads ‘chief shoe giver.’
It’s exactly the sort of jaunty, casual job title one might expect from the 37-year-old, who has spent the better part of a decade cultivating his image as a hipster Robin Hood while masterminding an ethical “one-for-one” business model now widely emulated in the retail world.
Mycoskie still sports the same piles of beaded bracelets and long curly hair that became his trademark in the early days of TOMS in 2006.
His Instagram feed looks like that of a yuppie backpacker, featuring exotic vacation sunsets and a video showing his followers how to brew organic Costa Rican coffee using a sock as a filter.
Alongside this insouciant image, Mycoskie has built a casual shoe empire now valued at $625 million, per a Reuters report. (A TOMS spokesman independently confirmed this figure to Forbes.)
On Wednesday, Reuters revealed that Bain Capital has acquired a 50 per cent stake in TOMS, beating out other private equity outfits.
Founder Mycoskie will remain at the helm. He’ll also retain 50 per cent of the company he started following an eye-opening trip to Argentina in his late twenties.
That means the one-time Amazing Race contestant has a stake in TOMS worth over $300 million. (Exact financial terms of the deal weren’t disclosed, but Mycoskie will likely have received cash from Bain, pushing his actual net worth well above that figure.)
Not bad for a guy who only started selling his $48 canvas espadrilles eight years ago.
Watch for Mycoskie’s net worth to increase as TOMS expands into new categories.
As well as footwear of all kinds (sandals and boots, for instance), the brand now sells optical frames and sunglasses. As with the company’s shoes, each pair of glasses sold means one goes to a needy person unable to afford them.
TOMS also sells ethical, fair-trade organic coffee. With each bag purchased, a week worth of clean water goes to a person in need.
Bain Capital Buys Toms, Will Still Give Away Shoes
Aug 21, 2014
Toms, a canvas shoe empire, has agreed to sell half of itself to Bain Capital, a private equity giant, in a deal that values the 8-year-old footwear brand at $625 million—a little bigger than Quiksilver, roughly on a par with SodaStream.
For Toms founder Blake Mycoskie, the transaction is the validation of a vision and a huge payday. It also brings Toms some blue-chip corporate clout as it expands its product offering and looks to expand abroad. “This partnership will enable Toms to grow faster and give to more people in more ways than we could otherwise,” Mycoskie said in the statement.
The pairing, however, is a bit odd—the M&A equivalent of a business suit and, well, a pair of Toms. Private equity firms such as Bain make money by what they call “creating value.” Sometimes that means a bit of MBA judo that the acquired companies aren’t capable of—say, a strategic coup levered up with a heap of debt. More often than not, however, it’s simply cutting the fat of the companies they snap up—in the parlance of the sector, “finding operational efficiencies.”
At Toms, the fat is the point: It gives away half its product. The buy-one, give-one sets Toms apart from other casual shoemakers, as much, if not more, than its canvas styling. The appeal is golden: Customers get a pair of shoes and the self-satisfying sense that only shopping-for-global-good can provide. “Blake found that for-profit and a bottom-line focus didn’t have to be in conflict with for-good,” Bain’s Ryan Cotton told Bloomberg.
But what if the profit part of that equation goes away? What if the company hits a rough patch and the seemingly ubiquitous canvas espadrilles stumble out of vogue? Believe it or not, white Birkenstocks, not motley Toms, are the shoe of the summer—in New York, no less.
Toms has tried to diversify with sunglasses and bags, and free-trade coffee, and Bain says it’s committed to the high road. But the company, and private equity as a whole, prides itself on making the tough choices its target companies won’t. Plenty of Bain companies have ended up in bankruptcy proceedings over the years. And the firm’s record of layoffs was laid out in detail when co-founder Mitt Romney ran for president in 2012. Free pairs of shoes, one assumes, are easier to toss than jobs.
What’s more, private equity lives and dies by the “exit,” the point at which firms eventually sell the company, whether it be to a conglomerate, another private equity firm, or public shareholders in an initia public offering. Toms’s charitable model has to survive not only Bain but also whatever bidders come behind it.
Vera Bradley acquires a majority stake in online jewelry store Pura Vida Bracelets
Jun 20, 2019
- Vera Bradley plans to buy a majority stake in Creative Genius, owner of Pura Vida, an online seller of handmade bracelets, for $75 million.
- Pura Vida reported a total revenue of $68.3 million in 2018.
- The company sells colorful string or braided bracelets that start from $6 each. They are made by artisans around the world and are sold online and in stores.
Vera Bradley announced Thursday it has agreed to pay $75 million to buy a majority stake in Creative Genius, the owner of Pura Vida, an online seller of handmade bracelets.
“Pura Vida is a highly differentiated lifestyle brand with uniquely strong products and amazing consumer loyalty,” Vera Bradley CEO Robert Wallstrom said in a statement. “We have many similarities in our value-based cultures, in our authentic brands, and in our devoted customer bases and emotional customer connections.”
Pura Vida reported net income of $3.8 million on revenue of $68.3 million in 2018.
The La Jolla, California-based company was co-founded in 2010 by Griffin Thall and Paul Goodman. The company sells colorful string or braided bracelets that start from $6 each. The jewelry is made by artisans around the world and are sold online and in retail stores.
The amount Vera Bradley will pay on the deal is subject to potential price adjustments. Also, if Pura Vida reaches certain performance targets, an additional $22.5 million may be paid as a bonus.
Vera Bradley has the right to buy the remaining 25% stake in the company five years after the deal closes. The transaction is expected to be completed in the second quarter.
Vera Bradley shares were up more than 3% in trading Thursday on the news. The stock, which has a market value of $420 million, has gained more than 40% since this year.
This startup is getting frat guys across America to wear short shorts — and they love it
Jun 20, 2015
Men’s short-shorts may seem like an unlikely product for an ecommerce startup.
But for Chubbies cofounders Kyle Hency, Rainer Castillo, Preston Rutherford, and Tom Montgomery, it was the most natural thing in the world to start a company based around retro-inspired shorts.
After graduating from Stanford, where they all met, the four guys pursued jobs in different fields ranging from traditional finance to the startup world to corporate retail.
Back in college, the four guys would wear retro short-shorts they found in thrift stores and had handed down from their dads and uncles. “If you had a really cool pair of shorts, people would talk about it,” Chubbies cofounder Tom Montgomery tells Business Insider.
So in 2011, a few years after graduating, they decided they’d had enough of their own jobs — they wanted to start their own company together, and they wanted to sell the short-shorts they loved wearing themselves. “We all had the mindset of wanting to run something ourselves and wanting to do something that was a little more meaningful and a little more fun,” Montgomery says. “It was such an extension of our personalities to start this company.”
It all started at a Fourth of July beach party
To test out the idea of mass-producing and selling men’s short-shorts, the cofounders made a few pairs of shorts and brought them to an annual Fourth of July celebration at Lake Tahoe. Along with 20 friends all clad in red, white, and blue, the cofounders hit the beaches at Lake Tahoe in their Chubbies.
“That was immediately where we saw how impactful the shorts were and also how polarizing the shorts were,” Montgomery says. Reactions ranged from “‘Good lord, those shorts are the greatest things I’ve ever seen,’ to ‘Get off of my beach, men’s legs belong under layers of fabric,'” Montgomery says.
The cofounders immediately sold out of the few pairs of shorts they had brought with them right there on the beach.
“That’s where we really understood that the product was fantastic in terms of the resonance that it had,” Montgomery says. “The shorts struck the same emotional chord with other people that it struck with us. It reminded us of our dads; it reminded us of the weekend.”
When they got home from the beach, the founders built out a website and made a couple hundred more pairs of shorts. And in September 2011, Chubbies launched its website. From the beginning, the founders were inundated, selling out of their early merchandise immediately. “From day one we saw there was a very talkable, very shareable notion around our brand,” Montgomery says. “We saw complete strangers who we hadn’t told about the brand purchasing from us.”
Recruiting college fraternity brothers
Montgomery and his cofounders launched their company in September, just before winter. They started gearing up for March, which would be the company’s first big inflection point. To make sure they started spring and summer sales strong, the founders sent emails to fraternity presidents and the heads of other social groups on college campuses, letting them know about the shorts.
“Invariably, the guys who responded to us were the fraternity presidents and heads of these groups saying ‘Hey, I know a guy who’s interested, and it happens to be me,’ and immediately they were on board,” Montgomery says. Today, Chubbies has an ambassadors program, and has plucked more than a hundred college guys to help it continue to spread the word on college campuses. If you walk around any big college campus when it’s nice out, you’re bound to see at least a few guys rocking Chubbies shorts.
So far, Chubbies has taken very little venture capital funding. In October 2012, Chubbies raised an undisclosed amount of cash from Rothenberg Ventures. Two years later, in April 2014, the company raised a $4.4 million round from Thrillist CEO Ben Lerer, Rothenberg Ventures, Trunk Club’s Brian Spaly, IDG Ventures USA, and other investors.
Since then, Chubbies has had a steady growth curve, Montgomery says. As the years have gone on, the company has expanded beyond their signature shorts, which have a 5.5-inch inseam. They’ve launched swim trunks and even a Hawaiian-style T-shirt, called the Nutter. They’re also experimenting with producing long-sleeve shirts and heavier-weight warmer items to let Chubbies customers wear shorts year-round.
“We’re constantly building this brand around the weekend and the feeling you get around Friday at 5 p.m.,” Montgomery says. “When a guy throws them on, the stress and rigors of the work week can be put on hold for a bit.”
Rainer Castillo, who leads the merchandising, product design, and development teams for Chubbies, says the company always wants to innovate on shorts, and one way the it does that is through riffs on nostalgic items. “When we were growing up, a big thing was tear-away basketball pants,” he says. “So we made a tear-away short that guys could rip away and there was a Speedo underneath. We take items of clothing that people are familiar with and turn them into shorts.”
Chubbies has expanded beyond just shorts to shirts with its Nutter shirt line. ChubbiesSome of the company’s products also border on the absurd. For example, Castillo says the company is working on an entire outerwear collection, including items like a rain-jacket short, a puffer short, and a sherpa short. “These items are outrageous, but our customer knows they’re going to find them nowhere else,” he says.
Chubbies also tries to innovate on the customer experience side of the company too. Kyle Hency, who heads up the business development and finance teams at Chubbies, says that one of Chubbies’ high-school customers wrote to the company to let them know that he had his pair of Chubbies stolen from his locker at school by bullies. The Chubbies team, in return, sent him karate lessons. “We do a lot of those types of things to go above and beyond for our guys,” Hency said.
Chubbies’ American-made shorts come in a number of patterns: there are the company’s patriotic Americans shorts, as well as shorts in any number of patterns and colors. They cost between $49.50 and $59.50 a pair.
What’s next for Chubbies?
Chubbies has also dipped into brick-and-mortar, with a physical retail store on Union Street in San Francisco. Hency says the company’s been “pleasantly surprised and excited by the traction we’ve had in that store to date, and the other thing that’s really interesting is that us owning that ‘Friday at 5’ time period. We’re getting lots of people flying into the store from Thursday end of day through Friday who are going on trips over the weekend.”
In the casual shorts market, Chubbies faces tons of competition. Everyone from huge brick-and-mortar retailers like Gap and Abercrombie cater to the 18-to-35-year-old guys that Chubbies also hopes to sell to. But few other companies — aside from the preppy Martha’s Vineyard-inspired Vineyard Vines brand and similar niche competitors — are going after the “Friday at 5 p.m.” mindshare like Chubbies.
Today, Chubbies has roughly 40 employees. Between its followings on social media and its mailing list, Chubbies’ community has grown to a “couple million people,” Montgomery says. In a couple weeks, Chubbies will have its annual “Fourth of Julyber Monday ” — basically a summertime version of Cyber Monday — and the company expects to do $1 million in sales on that day alone.
“Last year on this same day, we got close, but didn’t break it, but this year, we think we’ll eclipse it,” Montgomery says.
Playboy’s owner is buying a raunchy lingerie brand for $333 million, just as industry giant Victoria’s Secret ditches its Angels and tones down racy marketing
Jun 29, 2021
- Playboy’s owner PLBY is buying the Australian brand Honey Birdette, known for selling lingerie and sex toys.
- PLBY said it plans to expand the brand in the US to grow its clothing and “sexual wellness” business.
- The news comes as lingerie giant Victoria’s Secret upends its brand image and steps back from racy ads.
The owner of Playboy is spending $333 million on the racy Australian lingerie brand Honey Birdette.
PLBY Group, the company behind the late Hugh Hefner’s Playboy empire, said Tuesday that the acquisition would help it grow its Playboy-branded clothing business and its “sexual wellness” business, which covers Playboy sex toys and lingerie.
PLBY CEO Ben Kohn said in a statement Tuesday that the company would “take advantage of Honey Birdette’s superior product design, sourcing and direct-to-consumer capabilities” to grow its business.
Honey Birdette was founded 15 years ago and has about 60 stores, mostly in the US and UK, according to The Journal. It is set to open new flagship stores in Dallas, Miami, and New York over the next few months.
The brand, which PLBY said was expected to pull in $73 million in revenue between June 2020 and June 2021, is known for its provocative lingerie and marketing.
Some customers in Australia had called for the brand’s ad displays in stores to be taken down, saying that they were borderline pornographic, per a Daily Mail report from early June.
The plans for Honey Birdette’s expansion come as Victoria’s Secret is toning down its racy marketing. The lingerie giant said earlier this month that it was ditching its Angels, and instead partnering with a group of inspirational women including activists and entrepreneurs to promote a new brand image and shape its turnaround.
San Francisco Equity Partners’ Scott Potter: ‘Authenticity is something you can’t fake through a marketing channel’
Feb 6, 2019
Investments in the beauty industry have already been making waves this year, from color bar brand Madison Reed‘s $51 million raise to women’s shaving company Billie’s $25 million Series A round to clean beauty brand Jane Iredale’s undisclosed majority stake.
Jane Iredale debuted in 1994 and currently sells in locations like C.O. Bigelow and Follain. The recent deal, led by San Francisco Equity Partners (SFEP), was for an undisclosed sum. The private equity firm has had a longstanding interest in the beauty sector: Its portfolio includes Yes To, which retails at Target and Ulta Beauty (SFEP invested in the company 2008), and Japonesque, which sells at Dermstore and Rite Aid — the firm invested in it in 2015. Managing partner Scott Potter called the firm’s approach “hands-on,” as it assists in all aspects of brand building, from marketing to financial infrastructure and distribution.
“We are very growth-oriented investors,” he said. “We like partnering with companies that have some scale and profitability and want to grow their businesses the right way.”
Potter discussed with Glossy what trends are emerging in clean beauty, what authenticity in that space means and how retailers are looking to create their own proprietary brands to get in on the beauty boom.
What interested you about Jane Iredale and your other portfolio brands?
Yes To and Jane Iredale have some similarities. There has clearly been a movement and growing awareness with the consumer around clean beauty. When you have natural beauty brands like Jane Iredale and Yes To that have the combination of both natural ingredients and efficacy, it is a powerful combination. Both businesses have that in spades, and they’re very authentic brands; they are very transparent and speak to the consumer in an authentic way. They are also very social and have direct relationships with the consumer — that is something appealing to modern beauty consumers.
What does authenticity mean here?
Some legacy brands that have been in the market for a long time start flapping natural or pseudo-natural claims, or come out with a natural extension of what they are doing. But then you have Jane Iredale with a 25-year history, where Jane started the company in the Berkshires with a real belief that foundations were causing women serious skin-care concerns. Over the years, they also sold through dermatologists, plastic surgeons and cosmetologists that gave the brand a stamp of approval around efficacy. That authenticity is something you can’t fake or replicate through a marketing channel.
What beauty industry trends are you seeing emerge within clean beauty?
There is a big part of clean and natural beauty that is [focused on] ingredient stories. It is constantly evolving. Yes To is great because they have a platform in which we can launch lines tied to particular hero ingredients. Over the last year and a half, they have had great success with their charcoal line, which is a hot ingredient that has driven a lot of growth. We are also seeing trends in delivery mechanisms. For example, there was a lot of growth driven by Yes To in the mask category. And we are also seeing a lot with millennial consumers and how they are interacting with beauty: They are moving away from full-size tubes [of products] and more into single-use treatments, like paper masks.
What about retail? Are you seeing any changes happening there?
We are seeing big retailers, whether it is Walmart, Target or even Amazon, really wanting — across all consumer segments — to develop their own brands that are unique to them and also distinct from private label, which is [more like] generic packaging. [They want] brands that look and feel natural to the retailer. Beauty is an area where they are very focused on doing that. And while it makes strategic sense to do that in order to offer differentiation and, frankly, give the consumer a reason to walk into the store, they aren’t set up to do it well.
We will continue to look at brands, like Japonesque, that can offer that [service] to retailers. Japonesque has all the capabilities of being a national player within beauty, and they are actually partnering with retailers to give them exclusive brands. We think that is an interesting trend that will continue, and it’s one of our investment themes.
- - MeUndies Secures $40 Million Investment From Provenance
- - Sage Group Advises Bombas’ Recapitalization with Great Hill Partners
- - Lion Capital Acquires Stake in Premium Denim Maker Paige
- - Japan’s Adastria Fashions Acquisition of Velvet
- - Liz Claiborne Acquires Los Feliz Designer C & C; California Inc.
MeUndies Secures $40 Million Investment From Provenance
Nov 30, 2020
MeUndies Inc. received a fresh injection of capital this month to expand its popular online underwear subscription service.
Provenance SPV, a Beverly Hills-based growth equity investment firm, announced on Nov. 23 that it had invested $40 million in the Baldwin Hills-based company.
The funding will be used to increase MeUndies’ ability to reach customers in international markets and to allow the company to open physical stores, according to Provenance.
MeUndies launched in 2011 as an online-only underwear vendor. The company, which only sells products designed in-house, is known for a subscription payment option that allows customers to pay a membership fee and receive new underwear in the mail every month.
According to the company, it has sold more than 16 million pairs of underwear since launch. In 2013, MeUndies began carrying socks and now sells sleepwear and a host of accessories, including pet clothes and face masks.
Provenance founder Anthony Choe said in a statement that the investment firm had been impressed by the brand loyalty MeUndies has built among younger shoppers.
“MeUndies’ fun, creative print designs and affordable range of products resonate strongly with its core millennial and Gen Z audience, and the company’s ability to drive growth organically through its brand community is powerful,” Choe said.
The new investment represents a sizable chunk of the $48.9 million that MeUndies has raised since its launch, according to PitchBook Data Inc.
MeUndies Chief Executive Jonathan Shokrian said the investment would “enable us to expand our MeUndies brand community into new markets and new channels.”
It’s not clear yet which new markets the company might be targeting or where it might open new stores. In 2018, MeUndies opened a flagship store at the Westfield Century City mall. So far, however, it hasn’t opened any physical locations outside of Los Angeles.
Sage Group Advises Bombas’ Recapitalization with Great Hill Partners
Oct 9, 2018
Bombas, a sock manufacturer, has completed a recapitalization with Great Hill Partners, a Boston-based private equity firm, with financial advisory services provided by the Sage Group, a Santa Monica-based investment bank.
The Sage Group initiated the transaction and served as exclusive financial advisor to New York City-based Bombas. Andrew Dunst, a Sage Group vice president, declined to elaborate on the recapitalization of Bombas, which is “poised for significant growth.”
Bombas was founded by Dave Heath, Randy Goldberg, Aaron Wolk and Andrew Heath in 2011, with a focus on socks for a variety of activities to “support the hustle in everyone.”
Bombas will look to expand its reach in current and new markets as well as broaden its product offering, while leveraging Great Hill Partners’ e-commerce expertise.
Lion Capital Acquires Stake in Premium Denim Maker Paige
Oct 9, 2017
Santa Monica private equity firm Lion Capital has acquired an undisclosed stake in Compton premium denim maker Paige, according to West L.A.’s Sage Investment Banking, which advised Paige on the transaction.
The seller was San Francisco private equity firm TSG Consumer Partners, which bought its stake in the jean maker in 2012.
Paige was founded in 2005 by Paige Adams-Geller and struck deals to be carried in high-end retailers such as Intermix, Ron Herman, Bergdorf Goodman and Harvey Nichols.
Adams-Geller, a graduate of USC and former Miss California, serves as its creative director.
Japan’s Adastria Fashions Acquisition of Velvet
Apr 7, 2017
Culver City clothier Velvet has caught the eye of a Japanese retail giant.
The private women’s and men’s clothing company last week agreed to be acquired by Tokyo-based Adastria Co. Ltd. for $37 million.
Publicly traded Adastria, which owns 21 brands, more than 1,400 retail stores, and generated $1.8 billion in revenue last year, plans to expand the Velvet store count, although not aggressively, said Kei Liu, investor relations manager for the Tokyo company.
“We’ll open a few this year,” said Liu, who noted the deal is expected to close April 18.
Velvet, which makes the Velvet by Graham & Spencer brand that’s favored by celebrities, has eight retail stores in the United States and one in London, in addition to wholesale showrooms. Its women’s and men’s clothing and accessories are available through Nordstrom and Bloomingdale’s locations as well as e-tailer Shopbop.com. The company also markets through its own website.
There’s still room for the brand to grow, said Mickey Klein, co-founder and managing director at New York’s Astor Group investment bank.
“Velvet has a very appealing ‘now’ type of look and aesthetic and hasn’t developed its reach in Asia or its reach into its own retail locations in the U.S.,” Klein said via email. “The market is probably attractive for them to have many more of their own free-standing locations.”
New York private equity firm Snow Phipps Group had a majority stake in the company, with Velvet’s co-founders, Chief Executive Henry Hirschowitz, Jenny Graham, and Toni Spencer, holding the balance, said Andrew Dunst, vice president at Sage Group, a West L.A. investment bank that advised Velvet on the transaction. The co-founders are expected to stay on.
Representatives of Velvet and Snow Phipps didn’t respond to requests for comment.
Dunst said Velvet will be able to leverage Adastria’s expertise and supply chain.
In return, the purchase will expand Adastria’s holdings in the U.S. market, which had only included a minority stake in San Francisco apparel maker Marine Layer Inc. until now, Liu said.
“The U.S. is one of the largest clothing markets, so we want to have a presence there,” she said.
Adastria is still figuring out whether it will keep part of Velvet’s manufacturing in Los Angeles, she said. The company manufactures some of its products locally as well as overseas.
Husband-and-wife team Hirschowitz and Graham started Velvet as an upscale women’s T-shirt business in 1997. Spencer, a music video stylist originally from England, joined soon after. Over the years, the company expanded its women’s wear line and added menswear. In 2006, it introduced the Graham & Spencer brand for which it is most well-known.
The trio, advised by Sage, sold a majority stake for an undisclosed amount in 2011 to Snow Phipps, whose $2.3 billion in investments are chiefly in industrial companies. “We have in place a tremendous infrastructure here in Culver City,” Hirschowitz told the Business Journal at the time. “And this allows us to go and explore other things.”
Velvet had more than 200 employees and a 50,000-square-foot headquarters and distribution center when the 2011 deal went down.
Snow Phipps installed Andrew Megibow, its operating partner and former chief operating officer at women’s apparel company Ellen Tracy Inc., as nonexecutive chairman. Megibow said in 2011 that his firm was attracted to Velvet because of its strong management and design team and well-run corporate infrastructure. Snow Phipps planned to turn Velvet into a lifestyle brand by adding accessories and wanted to open retail stores, which the company didn’t have then. “We feel strongly about the prospects for standalone retail from a volume and branding standpoint,” he said.
Among Velvet’s eight U.S. stores, three are in Los Angeles, with outposts in Brentwood; Culver City; and Venice, on trendy Abbot Kinney Boulevard.
Snow Phipps’ investment time of six years is standard for private equity, said Camilo Lyon, a managing director at New York investment bank Canaccord Genuity Inc. who specializes in retail. “Generally, private equity firms look for an exit over a five-year period,” Lyon said.
Adastria was founded in 1953. In April of last year, the company took a minority stake in Marine Layer, a clothing company founded in San Francisco in 2009 with 23 retail locations across the country. Its moves in the United States are part of a goal to become a global retailer. “Our company’s aim is to grow bigger, especially overseas,” Liu said.
Although department stores have struggled lately as mall traffic has declined and sales migrate online, Velvet has the potential to shine, said Astor’s Klein. “I believe department store retail in general is suffering on some levels, yet Velvet continues to perform,” he said. “With additional resources behind it, I believe the brand can continue to grow at a pace that can significantly outperform their competitors.”
Liz Claiborne Acquires Los Feliz Designer C & C; California Inc.
Jan 6, 2005
Clothing designer Liz Claiborne Inc. has purchased C & C; California Inc., a Los Feliz designer and wholesaler of colorful T-shirts, for an initial equity stake of $28 million, plus additional payments in 2007, 2008 and 2009 based on the company’s future earnings.
C & C; California posted roughly $21 million in revenue last year primarily to specialty retailers such as Ron Herman, Dari and Planet Blue in Los Angeles, and Scoop in New York. It also sells at department stores Barneys New York, Bloomingdale’s and Neiman Marcus.
Last year, the company’s co-founders, designers Claire Stansfield and Cheyann Benedict, got a boost of free advertising when they were featured in a Visa ad and later appeared on the “Oprah Winfrey Show.”
Liz Claiborne said it expects the purchase to add 3 cents per share to fiscal 2005 earnings. Sage Group Inc. acted as the investment banker on the deal.
Playboy Owner to Buy Lingerie Retailer Honey Birdette for Over $330 Million
Jun 29, 2021
Former magazine publisher’s purchase is part of an effort to diversify beyond licensing its bunny-ear logo
The owner of the Playboy brand said it agreed to purchase an Australian lingerie retailer for $333 million, as the former magazine publisher tries to expand its business beyond licensing its famous bunny-ear logo.
Honey Birdette, the lingerie brand PLBY Group Inc. PLBY -0.88% is acquiring, has around 60 physical stores primarily located in Australia, with a few in the U.S. and the U.K.
The company expects revenue of more than $73 million for the fiscal year that ends this month, representing growth of over 40%.
The company plans to use its reputation as a pleasure and leisure lifestyle brand to accelerate Honey Birdette’s expansion in different markets through online and physical stores, according to PLBY Group Chief Executive Ben Kohn.
In the coming months, new retail stores will open in Dallas, Miami and New York. “We believe it is a billion-dollar-revenue business,” Mr. Kohn said. “They’re just entering the U.S. market. There’s a huge opportunity in Europe, in Russia and in other territories.”
The Wall Street Journal earlier reported that PLBY Group and Honey Birdette had agreed to the deal.
Playboy went public last year after a special-purpose acquisition company, or SPAC, acquired it in a deal that valued the brand at $415 million. Playboy had been taken private in 2011 by founder Hugh Hefner, who died in 2017, and private-equity firm Rizvi Traverse.
In the past decade, Playboy has focused on earning money through licensing deals, placing its name and distinctive logo on clothing lines, nightclubs, casinos, fragrances and more.
The company in March 2020 ceased publication in the U.S. of its print magazine, which had struggled with profitability for years. Licensing is still an important business for PLBY, Mr. Kohn said. “It’s a revenue stream for us on an international basis and in territories that we don’t have the expertise to operate in or where it doesn’t make sense to operate in,” he said.
Honey Birdette, which sells sex toys in addition to lingerie, has garnered attention in Australia for its provocative marketing, such as video mall ads featuring models wearing bondage collars.
Meanwhile, some competitors in the lingerie retail industry such as Victoria’s Secret are moving away from relying on supermodels in advertising and are incorporating inclusivity into their marketing.
“Although we want to be culturally sensitive to what’s going on in the macroclimate, we don’t want to change what Honey Birdette is doing,” Mr. Kohn said. “They’re provocative, but Playboy is provocative as well, and that’s OK as long as we’re being sensitive.”
Mr. Kohn said 60% of Honey Birdette sales are from repeat customers, largely women.
Eloise Monaghan, Honey Birdette’s founder, will continue to direct creative projects and will help design Playboy’s own intimates line.
“When I founded Honey Birdette 15 years ago, my ambition was to build a brand for women, by women; a brand that would serve as a platform for confidence and sexual and body empowerment,” she said.
Estée Lauder to Buy High-End Skin Care Brand GlamGlow
Dec 19, 2014
New York Cosmetics Company Expects to Close Deal Next Month
Estée Lauder is buying high-end skin care brand GlamGlow.
Estée Lauder Cos. is buying high-end skin care brand GlamGlow.
The New York cosmetics company–home to brands such as Clinique, Bobbi Brown and Origins along with its namesake line–said it expects to close the sale next month.
Terms were not disclosed.
GlamGlow was founded in 2010 for backstage and professional use in Hollywood’s entertainment and fashion industry.
“GlamGlow represents the ultimate in innovative facial masks,” Estée Lauder Chief Executive Fabrizio Freda said in a statement.
Estée Lauder group president John Demsey will oversee the acquisition. Mr. Demsey is also overseeing the acquisition of luxury perfume brand Editions de Parfums Frédéric Malle.
That purchase, announced last month, is also expected to close in January.
Estée Lauder’s shares closed on Friday at $76.25, up 1.23% for the year.
Warnaco to Buy Ocean Pacific
Aug 5, 2004
Ocean Pacific Apparel Corp., the Irvine-based clothier that once epitomized the country’s surfing craze, will be acquired by Warnaco Group Inc., the companies said Wednesday.
Warnaco — the New York-based maker of Speedo swimsuits, Olga bras and Calvin Klein jeans — will pay the investment group Doyle & Boissiere Fund I $40 million and assume $1 million in debt if regulators approve the deal.
Warnaco said it was attracted to Ocean Pacific’s “brand equity.”
Founded in 1972 by surfboard maker Jim Jenks, Ocean Pacific, along with San Diego-based Hang Ten, gained fame by taking the Southern California surf look national. Ocean Pacific’s signature corduroy shorts were must-wears for young men in the 1970s.
At its peak, before debt and competition forced it to seek Bankruptcy Court protection 12 years ago, Ocean Pacific’s sales from worldwide licensing operations topped $400 million.
Under Warnaco, Ocean Pacific headquarters will remain in Irvine and none of its 23 employees is likely to be laid off, the companies said.
Analysts applauded the deal. In a note to investors, Randall Scherago of First Albany Capital wrote that Ocean Pacific’s surf and beach products “should extend Warnaco’s stable of strong brands into the California lifestyle.”
Paul Altman, vice president of the Sage Group, which advised Ocean Pacific on the deal, said Warnaco’s infrastructure and expertise should help expand Ocean Pacific’s swimwear and sportswear lines, providing “the resources to take the brand to the next level.”
Ocean Pacific is the latest youth-market-oriented company to exchange independent roots for corporate security. In March, skate-shoe maker DC Shoes agreed to be acquired by Quiksilver Inc.; earlier this summer, shoemaker Vans Inc. was purchased by VF Corp. In 2002, skateboard-giant Kubic Marketing Inc. was snapped up by Globe International Ltd. and Nike Inc. purchased Hurley International, which makes clothes for skaters and surfers.
Jeffrey P. Klinefelter, an analyst with PiperJaffray, said sporty youth brands were good investments. “That board sport lifestyle is becoming more and more mainstream every year,” he said, making companies like Ocean Pacific “very compelling.”
The clothes maker’s casual “Ocean Pacific” line for men and women is sold in department stores, while the more upscale “Op” collection is available in surf shops and retailers like Barneys New York.
“The next window is obviously the growth opportunity to get it to the next level,” said Ocean Pacific President Richard Baker, who is set to remain with the company.
Doyle & Boissiere Fund purchased the controlling interest in Ocean Pacific in 1998 from San Francisco-based Berkeley International Capital Corp. Berkeley acquired Ocean Pacific’s assets in 1993, a year after Ocean Pacific filed for Chapter 11 bankruptcy reorganization. Warnaco itself emerged from Chapter 11 last year; it had filed in 2001, unable to pay debts from acquisitions and licensing agreements.
“There’s a bit of a double Cinderella story here,” Altman said.
Warnaco released its second-quarter earnings after the markets closed Wednesday. Net income was $4.4 million, or 10 cents a share, compared with a loss of $9 million, or 20 cents a share, in the same period in 2003.
Shares of Warnaco fell a quarter to close at $18.06 on Nasdaq. They added more than 35 cents in after-hours trading.
Shoemaker Toms sells 50% stake to Bain Capital
Aug 20, 2014
Toms Shoes founder Blake Mycoskie is keeping a 50% stake in the company and will remain on as “visionary” and “chief shoe giver.”
Toms Shoes Inc., the Los Angeles company known for giving away a pair of shoes for every pair it sells, has agreed to sell a 50% stake to investment firm Bain Capital.
The shoemaker said Wednesday that Toms founder Blake Mycoskie would keep a 50% share of the company and remain on as “visionary” and “chief shoe giver.”
Mycoskie said joining forces with Bain Capital enables the company “to grow faster” than going it alone.
“We’ve had incredible success, and now we need a strategic partner who shares our bold vision for the future and can help us realize it,” he said in a statement.
The financial terms of the transaction were not disclosed. However, a source familiar with the deal said the investment values the company at about $625 million, including debt.
The deal could raise eyebrows among some shoppers who are drawn to the company in part by its business model, which marries the for-profit company to a mission of doing good.
Since its founding in 2006, Toms has operated under a “one for one” model — giving a pair of shoes to a child for every one it sells. Its marketing centers largely on its charitable pursuits. One ad noted that Toms shoes “won’t make you run faster or jump higher but they will help you sleep better.”
Partnering with Bain Capital could be seen by some consumers as tarnishing the reputation of Toms as a company somehow above the capitalist fray. The Boston firm has plenty of experience in the retail industry, investing in companies such as Burlington Stores, Gymboree Corp. and Dollarama. It is perhaps best known for its co-founder, former Republican presidential candidate Mitt Romney.
Mycoskie is giving away at least 50% of his profits from the deal by establishing a fund to support causes he believes in, the company said Wednesday.
Toms has expanded beyond shoes into eyewear and coffee. It gives a pair of glasses to someone in need for every pair of sunglasses it sells. Earlier this year, Toms also started selling coffee — donating a week’s worth of clean water to a person in a developing country for every bag of joe purchased.
Quixote Studios buys Movie Movers, leading supplier of movie trailers
May 14, 2013
Quixote Studios, which operates Verde celebrity motor homes, has acquired Movie Movers of Sun Valley.
Competition in Hollywood’s movie trailer business is heating up.
Los Angeles-based Quixote Studios has acquired Movie Movers, one of the nation’s leading suppliers of production and talent trailers to the entertainment industry.
Quixote said it had purchased 370 trailers from Sun Valley-based Movie Movers, founded in 1984 by owner Bob Bailey, who plans to retire.
Financial terms were not disclosed.
The deal will allow Quixote, which also rents grip and lighting equipment, to significantly expand its custom fleet of luxury production vehicles, including the “Verde” branded celebrity motor homes. The company also runs studio facilities in Los Angeles, including a large studio in Los Feliz that is home to the long-running TV series “Criminal Minds.”
The combined companies will have a staff of more than 200 full-time workers and a vehicle fleet of 150 production trucks and more than 450 trailers.
The consolidation will create one of the largest production fleets in Hollywood, where the business is dominated by Star Waggons.
Quixote has until now mainly focused on the commercial sector. Buying Movie Movers will enable Quixote to expand into the film and TV sector nationwide, said Mikel Elliott, chief executive of Quixote Studios. Movie Movers has a well-established movie trailer business in the Midwestern and Southern states.
“We want to do television shows in L.A. and deliver new and better trailers,” Elliott said. “The marketplace has been sleepy.”
Quixote was founded in 1995, specializing in boutique film studios, production vehicles and film equipment.
As more film work has left California, Quixote has opened offices in New York, New Orleans, Atlanta and Michigan.
“With more resources and the marketing strength of Quixote, the possibilities are endless,” Bailey said. “This is a service business, and our clients will now get the best service and the best trailers in the business.”
CAA gets tangled up in blue, invests in J Brand jeans
Feb 5, 2010
The future of fashion in the entertainment industry just came into a little clearer focus this morning, with the announcement that Star Avenue Capital has acquired a majority interest in downtown Los Angeles-based jeans maker J Brand.
You see, Star, which is based in Century City, is part of a partnership that includes New York-based private equity firm Irving Place Capital and Century City’s talent agency powerhouse Creative Artists Agency. (Founded in 2009, this is Star’s first deal.)
Does that mean we’re going to start seeing J Brand jeans adorning the backsides of CAA’s famous clientele (which includes Drew Barrymore, Cameron Diaz and David Beckham) or popping up in affiliated film and TV projects (“Sisterhood of the Traveling Premium Pants,” perhaps?)? The answer is kind of.
“Sure, [CAA] will do all the logical product placement where it makes sense,” Star Avenue Capital’s managing director Mark Genender said in a phone interview earlier Thursday. “But the key thing is that premium denim responds well to media, and this is all about media activation; CAA has multiple ways” to do that.
“Media activation” is basically a euphemism for “building buzz,” and Genender gave as examples social media, generating original content and staging events as a way of pushing the brand out into popular culture. That last one, says J Brand’s co-founder and Chief Executive Jeff Rudes, is the biggest benefit to the premium denim label.
“We don’t have any shortage of celebrity clientele,” Rudes told me this morning. “For me, the real value of [the CAA relationship] is in marketing and events.”
Rudes used the example of an event he has planned for the upcoming London Fashion Week. “I can’t disclose what it is right now,” he said. “But it’s going to be fashion industry news, and we’ll be able to use CAA’s London office — and all the resources they have in place — to take this thing to another level.”
He said branding events have become increasingly important to companies, and that CAA’s existing marketing and branding infrastructure should give the label “exponential exposure” as it tries to grow in two key areas he identified as international expansion and growing the men’s side of the business.
But CAA, which helped launch the highly successful Vans Warped Tour that puts CAA’s music roster and the Southern California skate-shoe label in front of hundreds of thousands of teens nationwide each summer, isn’t the only partner bringing expertise to the deal, Genender pointed out.
“Irving Place Capital knows this space very well,” he said. “They were the financial backers behind Aeropostale, they’ve been involved with 7 For All Mankind and New York & Company. So they bring some direct industry experience to the table. And one of their senior advisors — [former CEO of Jones Apparel Group] Peter Boneparth– is going to be the chairman of J Brand’s board.”
Genender and Rudes characterized J Brand’s 2009 sales as “well in excess of $50 million” and forecast that the label is expected to see 25% to 30% growth this year.
Rudes will remain in the CEO role moving forward. As for J Brand co-founder Susie Crippen, who had served as the brand’s creative director?
“She’s moved on to other new things,” Rudes told me. “She’s very talented, and I think she just has other things on her horizon now.”
Italy’s Safilo buys Californian sunglasses brand Blenders in digital push
Dec 9, 2019
MILAN – Italy’s Safilo SFLG.MI has agreed to buy 70% of Blenders Eyewear, looking to boost digital sales through a deal it said valued the U.S. surf and ski sunglasses brand at $90 million.
Founded in San Diego in 2012 by surf instructor Chase Fisher, who will remain as chief executive and 30% shareholder, Blenders generates 95% of its turnover online and only recently opened its first bricks-and-mortar store in San Diego.
E-commerce currently accounts for only 3% of Safilo’s total revenue, mostly from its existing U.S. brand Smith.
“With the deal we intend to accelerate Safilo’s digital growth by learning from the great capabilities of the founder of this native-digital brand,” Safilo Chief Executive Angelo Trocchia told Reuters on Monday.
The deal is expected to close in January, boosting group earnings from next year, the CEO added.
Blenders’ sales are expected to reach $42 million this year, up about 40% from 2018, and Mediobanca Securities analysts estimated the acquisition would add 4% to Safilo’s revenue.
Shares in Safilo closed 2% up ahead of a new business plan on Tuesday.
Safilo has been struggling to lift sales and profit after moves by luxury groups including Kering PRTP.PA and LVMH LVMH.PA to end licensing accords for brands such as Gucci and Dior, taking production in-house.
Monday’s deal strengthens Safilo’s brand portfolio, which is less exposed to the risks of the licensing business, as it contends with increasingly stiff competition.
Domestic rival Luxottica last year closed a merger with the world’s biggest lens manufacturer, Essilor, to create eyewear giant EssilorLuxottica ESLX.PA.
Dior owner LVMH has established a joint venture with Marcolin, another domestic competitor, to design and manufacture eyewear for its Celine brand, formerly licensed to Safilo.
Kering, meanwhile, set up its own eyewear business to better control distribution and pocket rich profit margins and turned the Gucci license with Safilo into a production deal.
“It’s an interesting growth initiative, but in our opinion the main theme for the group is to manage the restructuring of its Italian manufacturing capacity (after the loss of the LVMH licenses),” broker Equita wrote in a note.
The acquisition will be financed through available cash and credit facilities, including a 30 million euro ($33.1 million)loan from Safilo’s top investor, Dutch investment fund HAL Holding.
That loan was described by Trocchia as “a concrete sign of engagement from the main shareholder”.
Editing by David Goodman
Vince Sportswear Line Is Sold
Nov 28, 2006
Vince, the five-year-old contemporary sportswear label of luxury basics that became a $50 million business, will be bought by the Kellwood Company, the companies said yesterday.
A deal was signed by Kellwood and the owners of Vince, which include the sportswear company John Paul Richard, with a purchase price of $75 million, according to one of the owners.
Kellwood, with brands including Phat Farm sportswear and Sag Harbor dresses, is one of the largest apparel manufacturers in the country and has added several contemporary collections with designer names over the last few years. Last week, the company said it would begin producing an Oscar de la Renta lifestyle collection for Macy’s department stores under a license agreement with Oscar de la Renta.
Vince, based in Los Angeles, was started in 2001 by Rea Laccone and Christopher LaPolice, industry veterans who had worked together building Laundry by Shelli Segal until that business was sold to Liz Claiborne in 1999. Richard Hirsh, the owner of John Paul Richard in Los Angeles and Ms. Laccone’s former employer, agreed to back them in the venture, using a holding company called the CRL Group. Sales of the Vince collection are expected to reach $45 million this year, according to a statement from Kellwood, based in St. Louis.
A zip-front cashmere hoodie sweater introduced in the first collection for about $240, along with matching T-shirts, became the Vince label’s signature described as a grown-up version of the Juicy Couture velour tracksuit. The collection, which has expanded with trendy linen shorts, washed leather blazers and fur-trimmed sweaters, is now carried in 400 stores, and a line for men is planned for next year.
In an interview last month, Ms. Laccone said the company was created with the concept of luxury basics that were casual and made of high-end fabrics, but not prohibitively expensive. The customer she had in mind was herself, “a woman who travels a lot and carries an Hermès bag.”
The companies said that Mr. LaPolice and Ms. Laccone had agreed to stay with the company after the sale.
ESTÉE LAUDER COMPLETES ACQUISITION OF GLAMGLOW
May 10, 2021
Estée Lauder today announced that it has completed its acquisition of facemask brand, GLAMGLOW.
The brand was founded in 2010 by Hollywood-based couple Glenn and Shannon Dellimore, who sought to produce a facemask that would give their actor friends glowing, camera-ready skin.
GLAMGLOW is now a global skin care company offering mud-based facial skin masks for both men and women. GLAMGLOW’s current line includes five masks formulated with a patented Teaoxi leaf-steeping technology.
Each mask is designed to address a specific skin care concern. For example, the original GLAMGLOW product, the Youthmud mask exfoliates for anti-aging effects, while Supermud is a clearing treatment formulated for problem skin.
Originally known as Hollywood’s Boutique Secret, GLAMGLOW now has a robust presence in global specialty-multi channels, including Sephora and Douglas, and in select high-end department stores, such as Neiman Marcus, Selfridges, Harvey Nichols, Bloomingdale’s and Nordstrom.
The signing of the deal was originally announced in December 2014, at which point the full acquisition process was yet to be completed.
Glenn and Shannon Dellimore said, “The Estée Lauder Companies embraces our brand philosophy that skin care can be sexy, innovative and fun. The Company has the scale and vision to help bring the brand to its next phase of growth while remaining true to the identity that we’ve worked so hard to build.”
William P. Lauder, Executive Chairman of The Estée Lauder Companies, commented, “Glenn and Shannon have built a highly successful, sought-after skin care brand with a uniquely Hollywood point of view. The Estée Lauder Companies embraces their entrepreneurial spirit and vision, and is committed to sustainably growing the brand while fostering the uniquely glamorous skin care story that they’ve created. We are so pleased to welcome them to our family.”
Terms of the deal were not disclosed.
Adastria buys Californian apparel brand Velvet
Apr 4, 2017
Adastria is to acquire 100 per cent of Californian contemporary apparel company Velvet, owner of the brand Velvet by Graham and Spencer.
Adastria is one of the largest apparel companies in Japan with revenue of approximately $1.8 billion. It operates 21 brands across Japan and Asia.
“Velvet is a distinguished brand in the US contemporary market, and we are delighted to welcome Velvet to the Adastria group,” said Masa Matsushita, representative director and COO of Adastria, announcing the deal. “This latest acquisition allows us to establish a strategic presence in North America and in the world of contemporary fashion, as we seek to transform Adastria into a leading global apparel company.”
Matsushita said the company has a successful track record growing brands and businesses by leveraging its strong value-chain management and brand management strategy.
“We have strong expertise in retail operations with more than 1400 retail stores and e-commerce operations throughout Japan and Asia. Working together with Velvet’s management team, we will accelerate the brand’s growth, especially in the direct-to consumer channels as we apply our expertise in retail and value-chain management,” he said.
Velvet is the second investment for Adastria in the US market. In April 2016, Adastria acquired a minority interest in Marine Layer, an upcoming apparel company based in San Francisco, recently named one of the “Hottest Brands of 2016” by Forbes magazine.
“Building upon our investments in Velvet and Marine Layer, we aim to strategically enhance our global brand portfolio moving forward,” said Matsushita.
Velvet by Graham and Spencer is known for its “modern, sophisticated staples with laid-back California attitude,” both for women and men. Headquartered in Los Angeles, Velvet has eight retail stores in the US, with a strong market presence through premium department stores and high-end specialty stores both in the US and abroad.
Henry Hirschowitz, Velvet’s co-founder and CEO said the deal marked a great opportunity for both companies.
“Velvet will provide a solid platform for Adastria, allowing the company to expand its presence in the North American Market. In addition, Velvet will greatly benefit from Adastria’s extensive resources which will enhance our product range and appeal in a greater way to our Velvet customers.
“Furthermore, with Adastria’s knowledge in retail and online, we feel strongly that further opportunities for Velvet will materialise. We are extremely fortunate and honored to become part of the Adastria Family of brands. The Velvet team is totally committed to making a meaningful contribution to Adastria”
Founded in 1997 by Henry Hirschowitz and Jenny Graham and shortly after joined by Toni Spencer, Velvet has collaborated in the past with supermodel Lily Aldridge and will be collaborating this summer with another supermodel, Kirsty Hume.
Vera Bradley acquires stake in give-back accessories brand
Jun 24, 2019
Vera Bradley, Inc. has acquired a 75 percent interest in Pura Vida, a digitally-native California company that sells handmade string bracelets and other accessories created by artisans in Costa Rica, El Salvador and India.
The deal is valued at $75 million, Chain Store Age reported.
Creative Genius, Inc., which does business under the name Pura Vida Bracelets, will operate as a subsidiary of Vera Bradley from its current headquarters in La Jolla, California under the direction of its founders, Griffin Thall and Paul Goodman.
Vera Bradley will retain the right to acquire the remaining 25 percent stake of the company for five years.
“Pura Vida is a highly-differentiated lifestyle brand with uniquely strong products and amazing consumer loyalty,” Robert Wallstrom, CEO of Vera Bradley (NASDAQ: VRA) said in a company statement. “The brand resonates with individuals worldwide, creating a community of fun-loving, socially conscious, and stylish advocates, reflecting its potential to become a full-fledged lifestyle brand.
Wallstrom said the companies are similar in their value-based cultures, authentic brands, devoted customer bases and emotional customer connections.
“Vera Bradley will be able to leverage Pura Vida’s expertise around digital marketing and social customer engagement, and Pura Vida will be able to leverage our product design and development, infrastructure, and back office support capabilities, he said.”
Vera Bradley had revenues of $416.1 million for its most recent fiscal year while Pura Vida reported total revenue of $68.3 million, per Chain Store Age.
Partners Thall and Goodman created Pura Vida in 2010 after meeting two bracelet artisans while on a trip to Costa Rica who were struggling to survive on what they were earning from their craft.
The company has grown to employ more than 650 people who now earn a steady income “thanks to the incredible support of Pura Vida fans,” per the company’s website.
Wallstrom noted that like Vera Bradley, Pura Vida was founded by two friends and entrepreneurs who “built a dominant brand by relentlessly focusing on customer experiences and connections.”
Fort Wayne, Indiana-based Vera Bradley was founded in 1982 by Barbara Bradley Baekgaard and Patricia R. Miller and named after Baekgaard’s mother.
MidOcean Partners acquires BH Cosmetics
Jan 5, 2018
MidOcean Partners (MidOcean), a premier middle market private equity firm focused on consumer and business services, has acquired BH Cosmetics (BH), a digitally native colour cosmetics brand.
MidOcean’s investment will be used to drive BH’s continued growth and expansion.
BH’s founders will retain a significant ownership stake in the Company. Financial terms of the transaction were not disclosed.
Launched in 2009, BH is a leading, direct-to-consumer colour cosmetics brand focused on the Millennial/Generation Z consumer. BH offers a full suite of high-quality colour cosmetics including products for the face, lips, eyes, brows as well as brushes and accessories. The Company has a worldwide social media following across multiple platforms and utilises a deep influencer network to drive brand awareness and customer acquisition. Given the Company’s heritage as a digitally native e-commerce colour cosmetics brand, BH has developed an advanced e-commerce platform with proven capabilities in customer acquisition, consumer engagement and customer loyalty.
MidOcean has maintained a longtime focus on the beauty sector, including its acquisition of IMAGE Skincare in August 2015. Consistent with its theme-driven investment approach, MidOcean worked closely with its management resources in identifying and evaluating opportunities in the beauty sector, resulting in the acquisition of BH.
BH will continue to be led by founders Fred Sadovskiy (CEO), Kirill Trachtenberg (Chief Strategy Officer), and Robert Sefaradi (COO), under whose leadership the Company has grown into an internationally-recognised brand in the colour cosmetics market. BH will look to expand the Company’s reach in current and new markets in partnership with MidOcean’s considerable operating resources.
Fred Sadovskiy, BH Co-Founder and CEO, says: “We are very excited to begin our partnership with MidOcean. MidOcean has tremendous resources and experience building branded consumer products platforms and has a proven track record of helping take founder-led consumer businesses to the next level. We are confident that MidOcean will be an excellent partner for BH as we look to continue BH’s expansion in the colour cosmetics market.”
Kirill Trachtenberg, BH Co-Founder and Chief Strategy Officer, adds: “BH was launched in 2009 with a focus on eye palettes and has since developed a full suite of cosmetics with high quality products at value price points. The partnership with MidOcean will enable us to dedicate additional resources to key areas of our business including innovation and product development, marketing and branding and customer service. We believe there is a tremendous opportunity to accelerate BH’s growth and have been very impressed with MidOcean’s collaborative approach to developing and helping implement a growth strategy for BH.”
Robert Sefaradi, BH Co-Founder and COO, says, “MidOcean’s experience building leading consumer brands and deep understanding of the industry makes them the ideal partner for BH. We have successfully accelerated BH’s growth in recent years by expanding into wholesale and international markets. With MidOcean’s partnership and guidance, BH will have the resources, industry knowledge and expertise to help take our Company and brand to the next level.”
Jonathan Marlow, Managing Director at MidOcean, adds: “We are incredibly excited to partner with BH, a leading color cosmetics brand with a strong direct-to-consumer and digital marketing business model and multiple levers for continued growth. MidOcean has significant experience building strong consumer brands with founder-owned businesses and we believe that BH Cosmetics has substantial opportunities for continued growth and expansion fuelled by appropriate investments in people, infrastructure and marketing. We see numerous opportunities to increase BH’s presence across channels and geographies and look forward to working with Fred, Kirill, Robert and the talented team at BH to drive this growth.”
Kirkland & Ellis acted as legal advisor to MidOcean. The Sage Group acted as exclusive financial advisor and Sheppard Mullin Richter & Hampton LLP acted as legal advisor to BH Cosmetics.
Safilo Acquires DTC Sunglass Brand Blenders
Dec 9, 2019
Smith parent company Safilo has acquired Blenders Eyewear, a fast-growing sunglass and goggle brand with roots in surfing and in active lifestyle.
Blenders is mostly a direct-to-consumer business, which accounts for 95% of sales and is driven by the brand’s social media prowess.
Chase Fisher founded Blenders in 2012 while working as a surf coach and selling the glasses from his backpack.
The brand is projected to reach $42 million in revenue in 2019, up 40% vs. last year and has had a compounded annual growth rate of 175% in the last three years.
The transaction values the company at $90 million.
Fisher will retain a 30% interest in Blenders and will remain CEO.
Safilo said it particularly likes Blenders’ digital and social media expertise, and that the brand’s price points appeal to a broad range of consumers with a focus on Millennials and Generation Z, both female and male.
Price points range from $35 to $65 for sunglasses and $40 to $95 for goggles.
“With Blenders, we aim to foster and accelerate our e-commerce and omni-channel strategy, leveraging the digital DNA and proven capabilities of the brand and putting Safilo’s global capabilities at its disposal to enable global expansion of the brand,” said Angelo Trocchia, Safilo’s Chief Executive Officer.
Fisher, the sole owner, said he is looking forward to working with Safilo to enhance production efficiencies and broaden distribution.
“This marks a huge step forward for Blenders and we’re excited to be part of Safilo to reach a wider marketplace,” he said. “Safilo’s product know-how and global distribution capabilities are the perfect complement to our digitally native business model, opening up worldwide expansion potential. We’re on a mission to build a thriving global community that inspires people to live in forward motion.”
Blenders sponsors athletes in the action sports space including surfer Lakey Peterson and snowboarders Cam FitzPatrick and Jessika Jenson.
How GlamGlow Spun Mud Into Gold
Jul 14, 2017
Founders Glenn and Shannon Dellimore built a fortune with a quick-acting facial mud. Now they’re ramping up for their next move.
The word “disruptive” doesn’t rush to mind at the sight of the ornate chandeliers, tufted silver sofas, and elaborately carved fireplace mantels that adorn the Hollywood Hills headquarters of GlamGlow, the skin care company founded by Shannon and Glenn Dellimore in 2010 and acquired by the Estée Lauder Companies five years later. But the Dellimores wouldn’t have risen to the top of the beauty industry if they hadn’t turned traditional skin care on its ear with the creation of a simple, fast-acting mud-based facial in a jar.
“The brand focused on doing one thing really well: treatment masks that target a range of skin care concerns, from dry skin to oily skin to anti-aging,” says Priya Venkatesh, Sephora’s vice president of skin care and hair merchandising. “And I love what they have done with their packaging; it brings fun and sexiness to a category that is normally quite serious.”
She’s referring to the distinctive GlamGlow boxes, in shapes like octagons, triangles, and diamonds and decorated in shades of Day-Glo orange, green, and purple. Now that the Dellimores are free of the day-to-day issues of running the company, they can focus on innovation from within the walls of GlamLand, their 1920s mansion-office just above the Sunset Strip.
“We are looking at every beauty category, whether it’s facial or body or hair, and thinking, ‘How could we disrupt it? What could be new and different about it?’” says Shannon, who dresses ultrastylishly no matter the occasion. “Nobody tells us what products we’re going to launch or how many or when. We put the plan together. But we have the background of a big company that we can tap into for resources like specialized labs and proprietary ingredients,” says Shannon, with Glenn drawing a parallel to Apple’s methods. “They work on a number of projects for years in advance without really knowing exactly what they want to launch,” he says, “and we’re doing the same until we have a great breakthrough.”
Among GlamGlow’s recent hits was a partnership with video game maker Sega to produce a cobalt-tinted version of the popular GravityMud mask in Sonic the Hedgehog packaging to celebrate the franchise’s 25th anniversary, targeting millennials and the 41 percent of gamers who are female. The product became an Instagram and Snapchat sensation, and not only because of the mask’s bright color. “With the selfie generation posting more photos on Instagram than ever before, GlamGlow was able to tap into the desire for camera-perfect skin, whether on the big screen or your mobile screen,” says Carlotta Jacobson, president of Cosmetic Executive Women, a global beauty organization with 9,000 members. This summer the brand will introduce three more limited-edition masks, packaged with illustrations of Sonic alongside fellow characters Tails and Knuckles. “Aligning video games with beauty, where customers are mostly female, was a risk, but Glam-Glow showed that having no rules can have big rewards,” says Venkatesh.
Next up, in September, is a collaboration with the Power Rangers franchise on two limited-edition GravityMud masks in green and gold, inspired by supervillain Rita Repulsa (played by Elizabeth Banks in the film released last March) and her monster Goldar. With a Power Rangers sequel potentially in the works, Glam-Glow seems well positioned with yet another transgenerational blockbuster. “Someone said that the beauty industry is on alert because of GlamGlow,” says Glenn. “Everybody wants to know, ‘What are you doing next? Because whatever you’re doing next, we want to do next.’ And we see them following.”
The birth of GlamGlow came about by happenstance. Shannon, an L.A. native, was employed as a paralegal and British-born Glenn as a business consultant for spas when they had a pivotal chat with actor Keanu Reeves at a party in 2008. “Keanu was talking about getting older and being up late reading scripts, and how to make his skin camera ready,” says Shannon. “It was this all-in-one thing: ‘I have ten minutes, and I want to look like I just had a facial.’
There was really nothing on the market at that time that provided instant results. So I thought I would ask my mother, who worked for 25 years as a counter manager for Chanel at Nordstrom.” The Dellimores’ research showed that skin care hadn’t evolved beyond pricey spa facials or time-consuming multistep product regimens. “It’s crazy—2008 is not that long ago, but there just weren’t multi-functional products that worked immediately after one use; you had to use five or six products for 30 days,” says Glenn. So the couple looked into exfoliating and skin-brightening ingredients to come up with their own formula for the mud mask. The process stalled when they couldn’t find a manufacturer to do small-batch orders. Then they discovered a family lab in San Diego run by a massage therapist who crafted her own oils and creams. She agreed to complete an order for the price of the raw materials, about $80, since the Dellimores’ finances were strained with the addition of a newborn and the purchase of their first home. That’s when the couple stumbled upon their secret ingredient: They had been committed to using green tea leaves, rather than green tea extract, in their mud base, despite a chemist’s warning that the leaves were unstable. But steeping the leaves in mud, it turned out, was what catalyzed their skin-enhancing properties. The Dellimores called the process Teaoxi and patented it, expanding to include a range of leaves (from eucalyptus to peppermint) and using pumice as a natural exfoliant. “My skin looked amazing,” says Shannon. “It was supersoft and brighter and glowy, like I had just walked out of a facial.”
By 2010, the Dellimores were scooping their so-called magic mud (because it worked in ten minutes) from a jar on the living room table into small containers and giving it to friends. Samples made their way to Lindsay Lohan and Solange Knowles, who frequented Voda Spa in West Hollywood, one of Glenn’s clients.
“Then Beyoncé, her mom, Jay-Z, Jeremy Piven, Nina Dobrev, and Natalie Portman wanted some,” says Glenn. “We still had no official name or packaging or pricing. If we had launched ten years ago, I don’t know if we would have been successful. But it was just at the point when technology was going crazy, and people wanted instant, fast results right now.”
After the Dellimores were approached by Neiman Marcus, Glenn came up with the name Red Carpet Glow and the tag-line “designed for … the entertainment, music, fashion and award industries.” But Shannon wanted something less Hollywood. They dubbed their company GlamGlow and renamed the magic mud YouthMud as the inaugural product. Glenn designed the star logo in honor of the Hollywood Walk of Fame, using their now-eight-year-old daughter London’s crayons.
YouthMud was launched at all 41 Neiman Marcus stores in 2011. Sephora began carrying the product the following year, and a SuperMud mask for problem skin, created in 2013 after American Idol contestants asked for pimple remedies, is still one of the company’s top-selling facial masks. “We were working around the clock to keep up with demand and didn’t realize we wouldn’t sleep for four years,” says Shannon of the business, which they built without loans or investors, living frugally and sharing one car. Even when distribution hit 80 countries and counting, they continued to plow the profits back into the company. By the time the Dellimores sold their L.A. operation to Lauder in 2015, Glam-Glow’s worth was estimated at more than $200 million.
It’s hard to quantify GlamGlow’s influence, but since the brand’s inception, the sales of mud-based skin products across the industry have quadrupled, according to market research firm the NPD Group. “In the last five years the mask category has grown over 200 percent and has greatly surpassed other core skin care categories, such as eye creams and serums,” notes Venkatesh. Also on the rise are quick-fix skin services: L.A.-based Skin Laundry reinvented the facial in 2013 with 15-minute treatments that incorporate noninvasive lasers and pulsed light for $65 and boasts outlets in New York, Arizona, Hong Kong, and London. Then there are the 30-minute chemical-peel facials ($49 to $79) at the Face Bar in Beverly Hills by renowned aesthetician Tricia Dikes, while celebrity dermatologist Ava Shamban offers age-prevention and skin-correction treatments in 30 minutes or less at SKINxFIVE in Pacific Palisades.
GlamGlow recently teamed with L.A.-based model and Instagram celebrity Nick Bateman, a longtime face of Abercrombie & Fitch, to engage his 6 million-plus followers. While Maybelline and CoverGirl have employed male influencers as well, Glam-Glow’s collaboration with Bateman was a first for a femalecentric skin care line. “We get a lot of guys using GlamGlow because it’s not regarded as a feminine product,” says Glenn. “Men do not want complicated,” adds Shannon, “and our products work fast in this fast-paced society.”
Solo Stove acquires Chubbies Shorts, rounding out new ‘Solo Brands’ portfolio
Sep 2, 2021
Solo Stove’s recent acquisitions, the latest of which closed yesterday, will form the basis for a new DTC-focused outdoor portfolio called Solo Brands.
John Merris and his team at the outdoor firepit brand Solo Stove didn’t set out to become serial acquirers, but that’s exactly what happened when the private equity-backed company went from zero acquisitions to three bolt-ons in the span of just a few months.
Solo Stove on Wednesday closed on its acquisition of men’s outdoor apparel brand Chubbies Shorts, a deal that followed the May acquisition of Oru Kayak and the August acquisition of paddleboard maker ISLE.
The result of the buying spree is a new outdoor platform called Solo Brands, with the quartet of businesses now working together under the majority ownership of Boston-based Summit Partners.
Merris told Outside Business Journal the reason for the spate of additions was simple: Solo Stove found a trio of like-minded brands that wanted to partner not only because of their outdoor-focused product lines but also because each is customer-obsessed with a penchant for direct-to-consumer sales and a strong focus on giving back to communities. Together, each brand adds value to the other.
“We just started leaning in hard on everything that these brands collectively could bring together and we started envisioning our customers in Chubbies gear feeling great about themselves, or out on the water on an ISLE paddleboard or in an Oru Kayak, or sitting around their Solo Stoves at camp,” he said Wednesday. “It just started all feeling right, and we thought, ‘These brands are in our wheelhouse, and maybe we’re thinking about something even bigger than we initially thought.’ And the idea of Solo Brands was born.”
A shared value of delighting customers
With the last of the three deals formally completed and closed, Merris becomes CEO of the Solo Brands platform and brand president for 10-year-old Solo Stove.
He said that while “acquire is the accurate and right word” to describe the addition of Oru, ISLE, and Chubbies, “in a lot of ways we just feel like we’re just partnering with great brands.”
For one, there are no redundancies with the union, no need to eliminate entire departments like finance or marketing or HR. Each brand will operate as its own P&L from its current headquarters location—Solo Stove in Southlake, Texas; Oru Kayak in Oakland, Calif.; ISLE in San Diego; and Chubbies in Austin, Texas—and with current teams intact. The same goes for each company’s leadership structure, Merris added.
“They’re not being acquired and thrown to the side, and that makes this unique,” Merris said. “They’re excited to lean into this together as a team and do something that has never been done before, which is bringing together a house of outdoor enthusiast lifestyle brands that are digitally native, and everybody wants to stay in and be a part of it. Everybody wants to continue to build their unique communities but then also share across those communities, which I think is pretty special.”
Solo Stove employed about 140 people, and now Solo Brands, with the addition of the three new companies, will have more than 220 employees, Merris said.
“We’ve almost doubled in size in terms of headcount through the acquisitions and we’ve done that without a single person being redundant and having to be let go, which has been awesome,” he said.
Merris declined to disclose the financial terms of the deals, but he emphasized that aligning with Oru, Chubbies, and ISLE was about much more requiring an EBITDA minimum or some other metric on a balance sheet.
Instead, it’s about the shared philosophy of providing great product for consumers and delivering that product primarily, though not exclusively, via a direct channel. Their similar approach to customer experience—Merris said the four companies all hold the aim of “delighting the consumer”—was a key unifier in bringing them together under one umbrella.
“This is not a financial play for us,” he said. “We truly believe that the next decade and beyond is going to be led by direct-to-consumer, digitally native brands that know how to deliver and are obsessed about delivering an exceptional customer experience. We believe that, if done right, bringing brands together as we’ve done is better than any one of us could have done it by ourselves. It’s going to give us improved access to the customer, it’s going to give our customer better options.”
The pandemic’s role
Another driver behind the deals, undoubtedly, was the pandemic. Not only did Covid-19 spur more people to venture outdoors and fuel demand for firepits, kayaks, apparel, and SUPs, but the brands that make those products found that going to market on their own, without the help of a retailer, was a way to control distribution and messaging while preserving margins.
“COVID accelerated an emphasis on the outdoors, and also around direct-to-consumer brands—brands that were figuring out ways to make it more convenient and faster and easier for customers to transact with them online,” Merris said.
Yet another commonality for the four brands—giving back to communities. Solo Brands’ core values are “Do Good,” “Live Grateful,” “Have Integrity,” and “Be Authentic.”
Merris said even the other three brands and even the platform’s backer, Summit Partners, live those ideals. He called that a rarity in the private equity world, which often gets tagged with the “slash and burn” reputation for buying companies, finding efficiencies such as cutting costs, and milking every dollar out of the business.
“Our whole brand mantra at Solo Brands and Solo Stove has been around ‘create good,’ and that’s what we’ve leaned into and from the beginning. That’s what we continue to lean into,” Merris said. “It’s important, in my role, to make sure that we’re partnered with the right sponsors and with the right backers that have that same mentality and that same commitment of creating good. Fortunately, we found that in Summit.”More deals on the horizon?
Something Solo Stove found in its partnership with Oru, ISLE, and Chubbies is a series of shared synergies across the businesses.
For example, Solo Stove operates 800,000 square feet of warehouse and fulfillment space across the United States and now the Netherlands, and the brand will soon open an owned fulfillment center in Toronto for Canadian customers. Those facilities will eventually handle fulfillment for all four brands, Merris said.
“What we’ve done at Solo Stove is bring most every competence in-house,” he said. “We realized several years ago that to do a great job for our customers, we needed to own the process, and that was across the board—from marketing execution to operations to warehousing fulfillment to supply chain to product development to customer service. We don’t outsource those services.”
When OBJ spoke with Merris on Wednesday afternoon, the ink was still drying on the third and final contract of Solo Stove’s acquisitions, but that didn’t mean the topic of more deals was off the table. After all, M&A is booming in the outdoor space, one recent example being a similar platform that MacNeill Pride Group has created with Klymit, GCI Outdoor, and ORCA.
Additions to Solo Brands appear possible, even likely. As Merris pointed out, there’s no proof-of-concept stage needed with the nascent holding company’s portfolio. Each brand will handle business as usual—with the benefit of some operational upgrades thanks to the shared synergies.
That allows Merris, Summit, and the Solo Brands leadership team the freedom and flexibility to begin scouting for new assets to target as consolidation ramps up across the outdoor space.
“Our criteria is a little bit more narrow than what you have seen in the outdoor industry in terms of consolidation, but I do think that M&A will continue to happen,” Merris said. “Our brands are growing, acquiring new customers, growing their communities, and launching new products. That means we’ll continue to look for brands we think fit great into the Solo Brands platform. If we find them, nothing will stop us from doing our best to partner with them.”
San Francisco Equity Partners acquires majority stake in mineral make-up brand Jane Iredale
Jan 23, 2019
Private equity firm San Francisco Equity Partners (SFEP) has acquired a majority stake in professional mineral make-up brand Jane Iredale.
The terms of the deal have not been disclosed but it’s believed that the companies will work together to strengthen the brand and its outlets – the mineral make-up range is currently stocked in 37 countries.
Founder of the brand Jane Iredale said: “To take the company to the next level, I knew we needed a partner with a proven track record in beauty who would be a good steward to our brand and company.
“Based on their experience working with leading authentic natural brands, SFEP is the ideal partner to guide us through the next phase.”
Scott Potter, managing director of SFEP, added: “As we have worked with Jane and her team, we have developed a strong appreciation for the quality and authenticity of the Jane Iredale brand, the strength of the company and its Great Barrington (Massachusetts, US) roots.
“This is a brand with uniquely strong products and unsurpassed consumer loyalty. We are thrilled to be chosen by Jane to help guide the brand to new heights.”
SFEP currently partners with a handful of beauty brands such as colour cosmetics company Japonesque and skincare range Yes To.
The Sage Group served as financial advisor to the transaction between the two companies and described the partnership as “perfect”.
Tanning brand Vita Liberata sold to US pharmaceutical firm for £30m
Jan 8, 2018
Professional tanning brand Vita Liberata has been sold to US pharmaceutical firm Crown Laboratories in a deal estimated to be in the region of £30m.
The purchase was backed by Hildred Capital Partners and made by Vita Liberata’s former investor, Irish Venture capital firm Broadlake.
Alyson Hogg, who founded the Irish tanning brand in 2003, has been promoted to president of consumer brands for Crown Laboratories, looking after Vita Liberata as well as Blue Lizard Australian Sunscreen.
Hogg said: “Crown and Hildred have a genuine understanding of the sun care market and a very impressive vision for the Vita Liberata brand.
“We’re thrilled to partner with them to leverage Crown’s strong positioning within the dermatology space and advance our mission of making self-tanning a viable alternative to sun exposure for all.”
Jeff Bedard, Crown Laboratories President and CEO, added: “We believe the Vita Liberata product line and the company’s strength in premium retail are a terrific complement to Crown’s Blue Lizard sunscreen brand and builds on Crown’s consumer healthcare products strategy in the dermatology space.
“Alyson and her entire team have done a remarkable job disrupting the self-tanning space, and we look forward to welcoming them to the Crown family. We will work together to continue to provide high-quality products that are at the forefront of skincare innovation.”
Crown Laboratories is a privately held speciality pharmaceutical company focused in dermatology.
NANETTE LEPORE IS ON ITS WAY TO BECOMING A LIFESTYLE BRAND
Jan 5, 2015
The New York apparel company has inked an agreement with Bluestar Alliance to expand the Nanette Lepore brand into new categories and territories.
Nanette Lepore is going global. The New York-based designer announced Monday that she and her eponymous, 22-year-old contemporary label — which is sold at the likes of Neiman Marcus, Saks Fifth Avenue and Macy’s — have signed an agreement to launch a new joint venture with Bluestar Alliance that will focus on extending the Nanette Lepore name into new licensed categories and markets, both domestic and international.
Nanette Lepore and her husband, co-owner and CEO Robert Savage, have taken a minority stake in the new venture, and will continue to own the majority of, and operate, the existing ready-to-wear business, denying an earlier report in WWD that said Bluestar had acquired a majority stake in the overall business, a spokesperson for Nanette Lepore said. Bluestar, founded in 2006, bills itself as a privately owned “brand management company” that specializes in licenses. Its current portfolio includes Catherine Malandrino, Kensie, and English Laundry.
The deal will transform the Nanette Lepore brand, and its existing ready-to-wear business, in a number of ways. The brand has already dabbled in licenses for fragrance, swimwear, home goods and a junior’s line, but the number of total licenses should increase substantially — eyewear would be one obvious category.
International expansion is also on the roster. Nanette Lepore is primarily sold through North American retailers, and has a presence in Japan, Hong Kong and Shanghai. “We definitely want to go deeper into China, Dubai and Korea,” said Jimmy Lepore Hagan, Nanette Lepore’s vice president of strategy.
In a phone interview, Lepore said she was personally interested in introducing “bespoke elements” to the ready-to-wear business in the first half of the year — allowing customers to customize the fabric, lengths and trimmings of some of the label’s core styles on its website and in its standalone stores in New York, Boston and Las Vegas. She also wants to introduce more high-end product into the ready-to-wear line, and explore new markets via freestanding pop-up shops. Otherwise, the core business will remain largely the same: Mostly wholesale, wholly manufactured in the U.S.A.
Conversations between Nanette Lepore and Bluestar Alliance began in 2013. The pair were introduced by The Sage Group LLC, an independent investment banking boutique. Lepore said she spoken to “a lot of different potential partners,” but that she felt the most comfortable signing with Bluestar. “We needed more licensing but didn’t have the contacts we needed to go forward with that,” she said. “What I liked about this deal is that I have the opportunity to have investment in my core company, and I still have complete control over my core company. This was the partner where I felt I had the most control over running the company the way I like to run it.”
Velvet Acquired by $1.8 Billion Japanese Company
May 11, 2021
Los Angeles–based Velvet LLC, owner of the Velvet by Graham and Spencer label, has been acquired by Adastria Co. Ltd., a $1.8 billion Japanese apparel company. Terms of the deal were not disclosed.
“Velvet is a distinguished brand in the U.S. contemporary market, and we are delighted to welcome Velvet to the Adastria group,” said Masa Matsushita, Adastria’s representative director and chief operating officer, in a company statement. “This latest acquisition allows us to establish a strategic presence in North America and in the world of contemporary fashion, as we seek to transform Adastria into a leading global apparel company.”
Matsushita said Adastria has a track record of growing brand and businesses through the company’s “strong value-chain management and brand management strategy.”
“We have strong expertise in retail operations with more than 1,400 retail stores and e-commerce operations throughout Japan and Asia,” he said. “Working together with Velvet’s management team, we will accelerate the brand’s growth, especially in the direct-to consumer channels as we apply our expertise in retail and value-chain management.”
This is Adastria’s second U.S. apparel acquisition. Last year, the company acquired a minority interest in San Francisco–based Marine Layer Inc.
“Building upon our investments in Velvet and Marine Layer, we aim to strategically enhance our global brand portfolio moving forward,” Matsushita said.
Founded in 1997, Velvet produces “modern, sophisticated staples with laid-back California attitude” for women and men. The company has eight U.S. retail stores and sells in premium department stores and high-end boutiques in the U.S. and overseas.
“This is a great opportunity for both companies,” said Velvet Co-founder and Chief Executive Officer Henry Hirschowitz. “Velvet will provide a solid platform for Adastria, allowing the company to expand its presence in the North American Market. In addition, Velvet will greatly benefit from Adastria’s extensive resources which will enhance our product range and appeal in a greater way to our Velvet customer. Furthermore, with Adastria’s knowledge in retail and online, we feel strongly that further opportunities for Velvet will materialize. We are extremely fortunate and honored to become part of the Adastria Family of brands. The Velvet team is totally committed to making a meaningful contribution to Adastria Co, Ltd.”
Hirschowitz founded Velvet with Jenny Graham in 1997 and were later joined by Toni Spencer. The company has collaborated in the past with model Lily Aldridge and has another collaboration planned for summer with model Kirsty Hume.
Tokyo-based Adastria was founded in 1953. The publicly traded company operates 1,358 retail stores in Japan and 108 stores overseas, owns 21 brands including apparel, lifestyle and restaurants.
Kao teams with ‘Rolls Royce’ of hair care for makeover
Jan 12, 2018
TOKYO — Cuban-born American hairstylist Oribe Canales is known to have 1,000 people on his salon’s waiting list. From the runway to the red carpet, anything he touches commands the spotlight.
Japanese consumer goods maker Kao hopes to attain a similar status in the cosmetics industry. In December, the company announced it will purchase the celebrity stylist’s namesake brand, Oribe Hair Care, for an estimated 50 billion yen ($441 million). For Kao, known for its conservative management style, it is the priciest foreign acquisition yet.
“It looks like a daring move,” a senior executive from a rival maker said, following Kao’s announcement. The decision surprised investors, too. During morning trading after the Dec. 21 announcement, Kao shares fell 1.4% as concerns grew over the possibility that the deal would be a financial burden.
Despite the worries, Kao is betting big on Oribe, hoping the brand can jump-start its struggling cosmetics business.
Founded by Canales in 2008, Oribe Hair Care sells high-end hair care products primarily to beauty salons. Pricey items — around $40 to $90 for a bottle of shampoo — are popular among wealthy American consumers. But despite the brand’s reputation as the “Rolls Royce” of hair care, its most recent sales figure, estimated at around $100 million annually, is less than promising.
Meanwhile, Kao is performing solidly overall, thanks largely to strong sales of its mainstay products, such as disposable diapers and detergents. The Japanese maker expects to log a record profit of 200 billion yen or so in operating profit for the year through December. Kao shares are trading at around their all-time high.
In contrast, the maker’s beauty care segment, including skin care and other cosmetics, is a drag on performance. For the first half of 2017, the beauty business logged 4.1 billion yen in losses, with an operating margin ratio at 8.1%, well below the entire business’ 12.2%. Kao’s overseas hair care business is also slumping.
Missing the boat
Generally, the cosmetics market is booming in Japan, with Shiseido and Kose posting record profits as they leverage the popularity of their luxury brands.
“Our business has not fully caught up with changing consumer preferences,” said Kao President and CEO Michitaka Sawada during a media briefing in August. Sawada also said the business was analyzing financial reports of rivals for the past 10 years, trying to identify differences with Kao.
Kao has been successfully growing its low- and mid-tier global brands of detergents and other consumer goods, but is lagging in cosmetics. To shore up this side of its business, Kao began aggressively buying foreign brands from 2000 and later, and acquired struggling domestic rival Kanebo Cosmetics in 2006.
Since then, Kao has avoided large acquistions in the consumer goods sector, in part to focus on putting the Kanebo brand on track. But the expected synergy that Kanebo was supposed to bring has not materialized.
Kao wants to raise its operating margin ratio to higher than 17% by 2030, from about 11% in 2015. Sawada is aiming to place Kao among the top three global consumer goods brands, after American giant Procter & Gamble and Anglo-Dutch conglomerate Unilever, both of which have market capitalization seven times and five times larger than Kao, respectively. The ambitious goals would not be realized without growth in its beauty care business.
Playboy buys Australian lingerie chain Honey Birdette for $443 million
Jun 30, 2021
Honey Birdette has been sold to the company behind Playboy magazine in a $US333 million ($443 million) deal set to rapidly grow the Australian lingerie chain’s international presence.
Announced overnight in Los Angeles, PLBY Group, which is listed on the Nasdaq stock exchange, told investors it had purchased the Australian brand with a combination of cash and stock.
Honey Birdette was founded in 2006 by Eloise Monaghan. The business operates around 60 stores mostly in Australia, with some in the US and UK. Nearly two-thirds of the business was owned by retail veteran Brett Blundy through his investment company BBRC International.
PLBY Group was started by the late Playboy founder Hugh Hefner and runs a number of operations under the Playboy brand, including various fashion products, sexual amenities, gaming locations and beauty products.
Chief executive Ben Kohn said the acquisition of Honey Birdette would help expand Playboy’s portfolio and provide it with product design, sourcing and direct-to-consumer capabilities to grow its apparel business further.
“We strongly believe in the power of brands, and are thrilled by Honey Birdette’s potential to become a multi-billion-dollar luxury lifestyle franchise,” he said.
“I’ve been enormously impressed by Eloise and the rest of the Honey Birdette team and the organic, rapid growth they’ve driven. This acquisition is expected to further our mission to become the leading pleasure and leisure lifestyle platform and our commitment to deliver long-term value to our shareholders.”
Honey Birdette is expected to report $73 million in revenue and $28 million in earnings for the 2021 financial year, with profits having nearly doubled on the prior-year period.
The company has courted controversy during its 15-year existence, having been repeatedly called out by the advertising standards watchdog for its racy advertising posters and sparking protest over its treatment of sales assistants, who were allegedly referred to as “showgirls”.
Honey Birdette co-founder sues over her skimpy payout. In 2019, former co-founder Janelle Barboza took the company and Mr Blundy to court, claiming she was short-changed when selling her stake in the business.
Ms Monaghan said the sale was a “momentous and proud” day for the retailer, with the Playboy deal moving the company into partnership with one of the world’s most iconic brands.
“When I founded Honey Birdette 15 years ago, my ambition was to build a brand for women, by women; a brand that would serve as a platform for confidence and sexual and body empowerment. I am immensely proud of everything we’ve accomplished – with 60 thriving stores across three countries – powered by 350 fierce female ambassadors,” she said.
“I’m thrilled to join Ben and the whole PLBY Group team on a mission to build a lifestyle of pleasure for all.”
On Wednesday, shares in a number of Mr Blundy’s other retailers rose significantly, with fashion jewellery chain Lovisa gaining 7.8 per cent, linen trader Adairs up 3.2 per cent and youth fashion store Universal rising 2 per cent.
Honey Birdette will open new flagship stores in Dallas, Miami and New York over the coming months and will continue to focus on expanding its footprint across the UK, US and Europe.
‘Perfect partner’: Blundy’s Honey Birdette sold to Playboy owner
Jun 30, 2021
Honey Birdette co-founder Eloise Monaghan says Playboy-owner PLBY Group is the perfect partner for the Australian-based lingerie chain and it plans to open dozens of stores in the northern hemisphere.
PLBY, a “pleasure and leisure lifestyle” company listed on the NASDAQ, approached Honey Birdette six months ago and, after months of due diligence, agreed to buy the business for $US333 million ($443 million) in cash and stock.
Ms Monaghan, who co-founded Honey Birdette in 2006 with her former partner, Janelle Barboza, owned 15 per cent of the company and will collect about $66 million in cash and shares. Financial Review Rich Lister Brett Blundy’s BBRC International owned 62 per cent and former Sanity Music executive Ray Itaoui’s Rayra Pty Ltd owned 21 per cent.
Ms Monaghan, who has been based in Los Angeles for two years and who will stay on at Honey Birdette as creative director, said she would never have sold to a business she did not admire.
“This is my baby,” Ms Monaghan told The Australian Financial Review.
“We had Australian companies and private equity groups from all over the world [looking at the business] but nothing felt right,” she said.
“When Playboy [appeared] and I had my first meeting with [chief executive] Ben Kohn … this company is exactly what Honey Birdette embraces. We’re the perfect partners – they’re into sexual health and wellness and female empowerment.”
The expansion plans are huge. I can see Honey Birdette having at least 40 stores in Europe and 40 in the US.
— Eloise Monaghan, Honey Birdette founder
Honey Birdette is known for its racy lingerie and standards-skirting advertising and has received negative publicity over the treatment of its sales assistants, known internally as “honeys”.
PLBY, which sells Playboy-branded apparel, condoms, sex toys and other merchandise, said the acquisition would expand its brand portfolio with a new high-end franchise and provide product design, sourcing and direct-to-consumer capabilities it would leverage to grow its core apparel and sexual wellness businesses.
“The expansion plans are huge,” Ms Monaghan said. “I can see Honey Birdette having at least 40 stores in Europe and 40 in the US.”
“We opened in Las Vegas recently and took $43,000 in the first three hours and they had to shut down the centre because the lines were so big,” she said. “We’ll soon open in Dallas, London, New York, Miami and Scottsdale, Arizona.
Honey Birdette would also expand into new categories including swimwear, loungewear, athleisure and everyday basic underwear, incorporating design elements from its most popular lingerie products.
Honey Birdette has 60 stores in Australia, the US and UK and expects revenue to grow 40 per cent to $73 million and earnings before interest tax depreciation and amortisation to almost double to $28 million in the 12 months ending June, boosted by demand for lingerie during the pandemic. The deal valued Honey Birdette at almost 16 times earnings.
The acquisition will significantly increase PLBY’s revenue. The company, which was founded by Playboy founder Hugh Hefner, reported sales of $US148 million in 2020 and had forecast revenue of $US200 million this year.
“We are extremely excited to welcome Honey Birdette to PLBY Group,” Mr Kohn said. “We strongly believe in the power of brands, and are thrilled by Honey Birdette’s potential to become a multi-billion-dollar, luxury lifestyle franchise,” he said. “I’ve been enormously impressed by Eloise and the rest of the Honey Birdette team and the organic, rapid growth they’ve driven.”
“This acquisition is expected to further our mission to become the leading pleasure and leisure lifestyle platform and our commitment to deliver long-term value to our shareholders,” Mr Kohn said.
The deal, which was signed in Los Angeles on Tuesday and which is expected to close in the third quarter of 2021, followed the sale of Mr Blundy’s Bras N Things lingerie chain to US apparel giant Hanesbrands for $500 million in 2018.
Mr Blundy, now based in the Bahamas, was the founder of Bras N Things and Sanity Music. BBRC currently holds stakes in fast fashion jewellery chain Lovisa, homewares chain Adairs, footwear retailer Accent Group and youth apparel retailer Universal Store.
Earlier this month Mr Blundy agreed to invest $40 million into the Best & Less clothing chain in return for a 16.4 per cent equity stake, enabling the company to revive plans for a $60 million initial public offering.
Last year, Ms Barboza sued Mr Blundy and BBRC International for $1.1 million, alleging he acted unconscionably and breached a contract when he exercised an option to buy her out of the business in 2014. Ms Barboza lost the case earlier this year, when Justice John Bond rejected her claim she was short-changed.