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BFD Expert Voices - Retail Deals

BFD Expert Voices

Manscaped, a DTC men's grooming brand, is now selling its products in more than 5,200 Walgreens locations across the U.S., says CEO Paul Tran.

Why it matters: It's likely Manscaped's largest distribution deal tied to physical retail to date — adding an important new growth channel as it gears up to go public via a merger with SPAC Bright Lights Acquisition Corp. later this year.

Catch up fast: Despite market volatility, Manscaped — which makes shaving tools and personal care products — is forging ahead with its public debut, Tran tells Richard.

"There is a lot of noise out there," he acknowledges. "Consumer confidence is a little bit shaky because of high inflation and other macro factors," he points out, noting the war in Ukraine and supply chain issues.

Even so, "great companies focus on being great companies and they focus on the business, and you try as hard as you can not to let the market dictate your decisions," he says.

Yes, but: DTC brands that went public via a SPAC last year  —  like Bark, the parent of BarkBox, and Hims & Hers  —  are now trading at a discount due to net losses and uncertainty around the future of those businesses. 

Nevertheless, Tran says he's focused on the long-term vision and growth strategy of his own company.

State of play: With the Walgreens deal, Manscaped's move into pharmacy makes the company's products more accessible, and in stores that customers frequent more often. 

Prior to Walgreens, the Manscaped brand was available in Target, Macy's and Best Buy stores, as well as military exchanges.

Having a presence in well-known physical retailers also has a halo marketing effect.

Of note: The expansion into Walgreens follows Manscaped's recently announced four-year deal with comedian Pete Davidson as its brand spokesperson.

Tran noted that Manscaped's sales a day later on Amazon Prime Day spiked 320% year over year. 

By the numbers: Net sales for Manscaped for the fiscal year ended Dec. 31, 2021, grew about 41% to $297 million, it reported in April.

Gross profit was nearly $144 million, while its net loss was almost $316 million and its adjusted EBITDA was $5.2 million.

Tran declined to comment on the company's current financials or growth trajectory.

1 big thing: Manscaped moves into Walgreens

Comedian Pete Davidson stands in a darkened room wearing a black blazer with his hands extended outwards.

Comedian Pete Davidson appears in Manscaped's marketing as its new brand spokesperson. Photo: Willie Petersen for Manscaped

Society Brands, an Amazon and e-commerce aggregator, is seeking acquisitions of sellers of essential products headed into the second half of the year, says CEO Michael Sirpilla.

Why it's the BFD: The Canton, Ohio-based company is bullish on the Amazon aggregation strategy, despite recent speculation about whether dealmaking in the space is slowing or the aggregation bubble is bursting. 

What they're saying:  "We need to take it on a case-by-case basis," Sirpilla tells Richard. "We just need to be really prudent when we're looking at assets to acquire."

By the numbers: Society Brands aims to buy around 12 to 15 brands per year, at a clip of one to two acquisitions a month, Sirpilla says. 

Ideal targets generate annual revenue of $1 million to $20 million, with profit margins between 15% and 25%.

Other metrics include being at least five years old, having more than 5,000 customer reviews and having a minimum 4.5-star rating.

Valuation multiples are typically between 4x and 6x EBITDA.

State of play: Buys will be financed from the company's March $204 million capital raise, led by i80 Group. 

"It was good that we raised the capital when we did," he says, citing the company's "founder-friendly" business model as a draw for investors.  

The company has already scooped up three brands, including Damn Near Kilt 'Em, all of which are growing 40% year over year on average, Sirpilla says.

What's next: "When you’re performing an M&A strategy, capital is always on the front of mind," Sirpilla says. "And you always need to be thinking about, 'How quickly am I deploying the capital that we've already raised? Am I being a good steward?'"

Alongside its aggressive acquisition strategy, Society Brands foresees additional fundraises, Sirpilla says, declining to elaborate on timing.

The big picture: Even though the company is focused on e-commerce in the near term, it eventually aims to pursue an omnichannel retail strategy, Sirpilla says.

That includes taking the brands international and some brands may get their own physical stores. 

"For the right brands, brick and mortar will be the right fit," he adds.

2. The BFD: Society Brands outlines M&A strategy

Fashion retailer H&M will sell its assets in Russia, the Russian Ministry of Industry and Trade said.

Potential buyers include a Russian company or a company from a country that has not imposed sanctions on Russia.

The Wayne-Sanderson Farms tie-up could change how U.S. poultry farmers are compensated, in a boon for ESG advocates, Bloomberg reported.

Per merger conditions established by U.S. government officials, Wayne-Sanderson Farms will be prohibited from using a "tournament system" to pay growers.

Tournament systems pit farmers against each other, rewarding those with the largest poultry. Critics decry the rankings as opaque and open to abuse.   

 Cargill and Continental Grain's joint acquisition of Sanderson Farms, which closed this month and is valued at $4.53 billion, combined the sixth- and third-largest U.S. chicken producers. 

3. Retail therapy

Illustration of a cursor lounging on a couch

• Vista Outdoor acquired sport fishing company Simms Fishing Products for $192.5 million. Read more.

• Revolution Foods, which provides diverse nutritional meals for K-12 schools and food-insecure communities, acquired Better 4 You Meals, a provider of vended meal services for schools and seniors. Read more.

• MenuSifu, a New York-based restaurant POS company, raised $20m in Series B funding led by Challenjers Venture. www.menusifu.com 

• Core Biogenesis, a plant-based bioproduction company whose platform can be used to create new drugs or fake meat, raised a $10.5 million Series A funding round. Read more.

4. Retail transactions

• Cotopaxi, an impact-driven adventure lifestyle brand, appointed Grace Zuncic as chief people and impact officer. Zuncic held various executive leadership positions at Chobani before joining Cotopaxi. 

July 28, 2022

1 big thing: Manscaped moves into Walgreens