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Global Data listed Goldman Sachs as the top financial adviser in 2021 for the retail sector by deal value, as our chart yesterday indicated. 

Global Data credited Goldman with $39 billion worth of retail sector transactions. In 2nd place, JPMorgan ($30 billion); 3rd was Rothschild ($29 billion). 

Details: Among the deals Goldman was involved with last year: LVMH's acquisition of Tiffany & Co.; L Brands' separation of Victoria's Secret; Hellman & Friedman's At Home buyout; Birkenstock's sale to LVMH-backed L Catterton.

What they're saying: Ben Frost, Goldman's global co-head of its consumer retail group, tells me that the turnaround in this sector is extraordinary when seeing where things stood in the industry in and around 2015. 

“The pandemic forced companies to figure out omnichannel. Look at what restaurants have done, for example. They never would never have been that far along without the pandemic," Frost says.

Catch up fast: Experiential retail takes customers beyond just walking in a store, buying stuff, and walking out. If companies invest in the experience, consumers respond. 

Van's downtown Los Angeles store is a two-floor, 11,500 square foot space that includes an art gallery, skate shop and art studio, for example.

Frost said: “There’s comfort around experiential retail. You have companies in this space that have gone from an afterthought, to a double-digit EBITDA valuation. They figured out a way to make visiting the store experiential. These companies changed their business models, and made it appealing to more customers and investors."

Be smart: Frost says looking ahead this year, there are three industry areas he'll be watching for consolidation: consumer services, convenience stores, and apparel.

Driving the news: Whether strategic buyers would be driving deals in the space versus private equity firms, Frost was unequivocal: private equity.  

1 big thing: Goldman's retail recipe 

Peloton Interactive's valuation may be beaten up, but a mix of industry sources say the company isn't an M&A target. Not yet anyway.

What they're saying: The sources I have spoken with over the last few days say there's really no there there when it comes to M&A moves around the battered stock.

Of note: Even with midsized activist Blackwells Capital agitating for a sale, Peloton investors aren't likely to sell at a price that isn't a decent premium above the company's IPO.

Event-driven research shop, Gordon Haskett, also ascribes to the no sale view: "TCV (Technology Crossover Ventures) just bought stock at $46 in a mid-November follow-on offering. We'd be surprised to learn that it would be open to selling two months later and while the stock is two dollars below the $29/share IPO price from 2019."

Quick take: If M&A were in the picture, the speculative buyer list includes Apple, if it wants cred in the fitness space, or Microsoft, or a private equity buyer. That said, Axios' Dan Primack and the WSJ's Cara Lombardo both noted on CNBC that any Peloton M&A buzz is muted.

Primack said Peloton CEO John Foley is not going to take a firesale price, a case bolstered by the company's dual-class structure. WSJ's Lombardo agreed that Peloton shares have been under pressure for a while, with no strong scent of a buyer to date. Go deeper.

But, Lombardo also noted that Microsoft's agreement to buy Activision started with a similar scenario — a company under pressure, and a buyer saying we're here and interested if you want to talk.

2. The BFD: Peloton's price

A trending arrow breaking and falling down

Grove Collaborative's CEO Stuart Landesberg tells me he chose to go public by merging with Richard Branson's Virgin Group Acquisition Corp. II this spring despite the stigma of SPACs because of the tycoon's credibility and knowledge.

Why it matters: The certified B Corporation is forging ahead with its deal with Branson's acquisition vehicle because it brings more to the deal than just money.

What they're saying: Industry observers tell me that even though the feverish appetite for SPACs has cooled, there is still a place for those that have the attributes of a strategic.

For example, the acquirer may provide deep industry expertise or connections that could help a company continue to scale.

Catch up fast: In early December Grove Collaborative said it was combining with the SPAC, which is expected to generate $435 million in net proceeds.

That money will be reinvested in scale and product development.

The transaction is expected to close either in late Q1 and early Q2.

Between the lines: Uses of funds could include the purchase of makers of sustainable consumer products such as household supplies or personal care products, Landesberg tells me.

The company has made five small acquisitions in the millions of dollars range, not the tens of millions, he said.

But those purchases have emboldened Grove Collaborative to think about what M&A can be for the company.

Of note: The startup's aim is to help create a zero plastic world.

3. Grove Collaborative's SPAC

Business tycoon Richard Branson sports a yellow and blue band uniform of sorts while walking down a city street.

Richard Branson. Photo: Josh Brasted/Getty Images

Data: GlobalData Financial Deals Database; Chart: Sara Wise/Axios

We featured Global Data's financial adviser league table list yesterday (and the Ben Frost interview above), so today we'll give you their legal adviser retail M&A tally, by deal value. Congrats to Ashurst. Stay tuned for a word from them on their success last year. 

4. Retail therapy: Chart of the day

TPG is seeking a buyer for its minority stake in jewelry maker APM Monaco, after IPO plans fell through, per Bloomberg. http://axios.link/pSAC  

Utz Brands, a Hannover, Pa.-based maker of salty snacks, has acquired Clem Snacks and J&D Snacks, which distribute the company's products in New York City and Long Island.  https://www.utzsnacks.com/

Deliverect, a Belgian online ordering platform for restaurants, raised $150m in Series D funding at a $1.4b post-money valuation. Coatue and Alkeon Capital Management co-led, and were joined by Redpoint Ventures, Newion, Smartfin, OMERS Ventures and DST Global Partners. www.deliverect.com

Starship Technologies, an L.A.-based maker of autonomous delivery robots, raised €50m in equity and debt from the European Investment Bank. http://axios.link/726h

Soona, a Denver-based virtual photoshoot platform for e-commerce, raised $35m in Series B funding. Bain Capital Ventures led, and was joined by insiders Union Square Ventures, Matchstick Ventures, Starting Line Ventures, 2048 Ventures and Range Ventures. http://axios.link/fZ4W

Bokksu, a Japanese snack subscription service, raised $22m in Series A funding. Valor Siren Ventures led, and was joined by Company Ventures, St Cousair, World Innovation Lab, Headline Asia and Gaingels. www.bokksu.com

Kencko, a Lewes, Del.-based maker of plant-based organic food products like smoothies, raised $10m in Series A funding. Siddhi Capital led, and was joined by Next View Ventures, Riverside Ventures, Silas Capital, Cheyenne Ventures, Shilling Capital, Indico Capital, Mission Point, Gather Ventures and Nextblue Ventures. www.kencko.com

5. Retail transactions

Sachin Dhawan joins personalized styling service Stitch Fix as chief technology officer. He was previously SVP of infrastructure and operations at Visa.

Eraldo Poletto is the new CEO of Italian denim brand Diesel in North America. He was most recently the CEO of high-end footwear brand Stuart Weitzman, which is owned by Tapestry.

6. It's personnel

                             Credit: Giphy

I remember when I bought my first pair of Birkenstocks during one summer in Germany as a high school student back in the 1990s. 

My German host family poked fun at me for wearing them in public with no socks, because then they were worn informally as house slippers, or so I was told.

The clogs have had their moments in the sun, off and on, going back to the 1960s when they were first introduced to the U.S.

Today, as you know, Birkenstock is a global brand. It even sold a majority stake to PE firm L Catterton last year in a deal a source said was worth in the neighborhood of €4 billion.

No longer shoes to wear only at home, you can now buy luxury versions of them from Dior. And I'm even writing about them now for my job. 

7. Dior Birkenstocks

Good morning, Retail readers! Welcome to Tuesday's edition.

🚨Activist investor Macellum Advisors is now pushing Kohl's to give it a board seat and to make a statement saying it is considering strategic alternatives. (Reuters)

Situational awareness: Today's newsletter features Goldman's view on the consumer-retail landscape, deal-related analysis of Peloton and Grove Collaborative, legal league tables and Birkenstocks. At the top and bottom. 

January 25, 2022

1 big thing: Goldman's retail recipe