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BFD Expert Voices - Retail Deals

BFD Expert Voices

Figs, a $3.6 billion health care apparel brand, is adding three heavy-hitter directors to its board: former Procter & Gamble CEO A. G. Lafley, Credit Karma CEO Kenneth Lin and former Amazon exec Jeffrey Wilke.

Why it matters: This comes as its stock languishes in the low $20s, having gone public last year and hitting a peak of $50.40 last June. 

Details: Billionaire investor and Figs shareholder Thomas Tull, increased his existing stake by 250,000 shares recently, after selling a huge chunk last fall following the IPO.

Tull's purchase, combined with recent results, has helped Figs regain some investor confidence.

"We were getting bucketed ... with other DTC companies that weren't profitable.," co-CEO Trina Spear tells Richard.

"We're incredibly profitable," she said, pointing out that the company had a 70%-plus gross margin in 2021 and is guiding the same for 2022.

Of note: In addition to scrubs, the company makes lifestyle products like compression socks and outerwear, constituting 17% of revenue.

Longer-term the company could look at making uniforms for other professions, but the focus, for now, is health care, Spear said.

Meanwhile, bankers have told Richard that Figs is a potential private equity takeout target, given its valuation and accompanying growth and profitability. Our newsletter from Feb. 17 features Figs among LBO candidates.

Figs wants to stay public, co-CEO Heather Hasson tells Richard. Hasson says the company is focused on expanding its nearly 3% U.S. market share and growing overseas. 

1 big thing: Figs adds big-name execs to board

Illustration of scrubs on a hanger with a dollar bill overlay

Activist investor Carl Icahn has nominated two directors to the board of the supermarket chain Kroger and voiced animal rights concerns over its supply chain and use of gestation crates in pork production, Kimberly writes.

Why it's the BFD: The move extends Icahn’s animal welfare campaign to another part of the food industry, more than a month after he launched a proxy fight with McDonald’s.

Icahn first approached Kroger late last week to discuss his intentions, the company said.

What he's saying: “Kroger’s inaction towards creating meaningful animal welfare policies and verification methods is totally out of step with consumer desire and current legislation.”

His candidates have superior knowledge and experience related to animal welfare and “other ESG weaknesses,” Icahn added, referring to environmental, social and governance issues. 

Icahn also took issue with Kroger's wage gap, accusing the company of “flagrantly side-stepping financial obligations to workers who don’t make a fair wage.”

The other side: Kroger said it prioritizes ESG matters and regularly consults with animal welfare groups and suppliers on animal rights.

“Responsible sourcing throughout our supply chain is embedded in how we operate and is of the highest importance to our company,” the company said in a statement yesterday.

Kroger said it has committed to a framework that calls for all of its suppliers to shift away from gestation crates by 2025.

Flashback: In February, Icahn similarly nominated two board members to McDonald's, demanding the fast-food giant end the practice of keeping sows in confined spaces. 

McDonald’s fired back, arguing that the "current pork supply in the U.S. would make this type of commitment impossible."

What’s next: Kroger said it will review the suggested nominees and present its own recommendations in a proxy statement at the company's annual meeting with shareholders. A date hasn't yet been announced.

2. The BFD: Icahn takes pig fight to Kroger 

Carl Icahn. Photo: Adam Jeffrey, via Getty Images

Edison Partners is putting the finishing touches on an oversubscribed, $450 million fund, which is its 10th.

So far the fund has made seven investments, including leading a $36 million round for online furniture resale marketplace Kaiyo.

Bonsai, an e-commerce platform that connects publishers and retailers, has raised a C$21 million ($16.8 million) Series A, CEO Saad Siddiqui told our colleague Kerry Flynn.

The round was led by Framework Venture Partners with participation from Next Play Capital and Alumni Ventures Group.

Media companies have leaned on e-commerce as an alternative revenue source, from the New York Times to more recently the Wall Street Journal, amid increased competition for digital ad dollars and subscriptions. 

Lululemon Athletica delivered a robust Q4 to investors, revealing that revenue for the quarter increased 23% to $2.1 billion.

Comparable sales at the athleisure retailer, also a strong indicator, grew 22%, while net revenue for the year was nearly $6.3 billion, a record.

Its stock is up over 8% in morning trading.

3. Retail therapy: Edison, Bonsai, Lululemon

Illustration of Sigmund Freud holding a collection of shopping bags.

• SFERRA, an Italian luxury lifestyle brand, will sell textile maker Brahms Mount to Faribault Woolen Mill.

Glimpse, the product-placement platform for short-term rentals, raised $6.2m in a seed round led by GSR Ventures, Origin Ventures, Y Combinator and several angel investors. http://axios.link/yFBu 

• Prodport, an e-commerce platform that helps customers create personalized product detail pages, raised $3.6m in a funding round led by Praxis, Exuberance Capital and Prodport CEO Ohad Hecht. http://axios.link/Z3Nu 

• Baboon to the Moon, the luggage brand, raised $3.5m in Series A funding. Woodland Management, a Pittsburgh-based family office, and Moose Knuckles Canada CEOs Noah Stern and Ayal Twik co-led the round. www.baboontothemoon.com 

• kdc/one, a Canadian provider of custom formulation, package design and manufacturing solutions for beauty, personal care and home care brands, received a “significant investment,” led by Cornell Capital, and joined by KKR. http://axios.link/dklN 

• BODS, the digital fashion company with garment-fitting technology, raised $5.6m in a seed funding round. Peter Boyce II at Stellation Capital led, and was joined by celebrities Karlie Kloss and Jenny Fleiss, as well as Long Journey Ventures, Third Kind Venture Capital and more.

• Ynsect, the French provider of edible insects for pet food and fertilizers, purchased U.S. mealworm producer, Jord Producers, for an undisclosed sum.  http://axios.link/ls2J

4. Retail transactions

• Macy’s named Marie Chandoha, the former CEO of Charles Schwab Investment Management, and Jill Granoff, the CEO of investment firm Eurazeo’s Brands division, to its board, effective April 1. http://axios.link/xN1C 

• Toast, the digital platform built for restaurants, appointed Jennifer DiRico as general manager and head of international. http://axios.link/RlpZ 

• Golden State Foods, a supplier to the foodservice and retail industries, named Hugues Labrecque as vice president of sales and Trisha McRoberts as group vice president, strategic sourcing. http://axios.link/9wqJ 

• Orva, an e-commerce platform specializing in the sale of footwear, apparel and home products, appointed Joseph Falcão as its CFO. http://axios.link/cgYs 

5. It's Personnel

⏰ Six days until Axios’ inaugural What’s Next Summit! Register here to attend virtual livestream sessions featuring the CEOs of GM, Accenture, Slack, TIAA and more.

March 30, 2022

1 big thing: Figs adds big-name execs to board