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Vuori is proceeding with its ambitious store expansion and hiring efforts this year despite choppy economic waters, founder and CEO Joe Kudla tells Richard.

Why it matters: Consumers can't seem to satiate their appetite for athleisure wear  — rival Lululemon's revenue, for example, increased 32% to $1.6 billion in Q1. 

And as we've noted, retailers are opening stores at a rapid pace as consumers return to in-person shopping, and it becomes more difficult to acquire customers online.

By the numbers: The active lifestyle brand aims to open 100 stores over the next five years, Kudla says.

Near term, Vuori will open 10 more this year and between 20 and 25 next year on top of the 21 stores it already operates, he says.

"We're not slowing down on that cadence," he says. The company has been cash flow positive since 2017,  Kudla said, noting timing is optimal to look to secure additional real estate.

Vuori will also add 100 employees this year, with plans for another 200 next year.

Yes, but: Despite the pace of its growth, which Kudla says will be a high double-digit percentage this year, the company is taking a conservative approach to ordering inventory for next year.

"We have plans that take into account a potential recession," he says, adding the company has not yet seen an impact on sales.

Kudla declined to disclose financial figures for the company.

Flashback: The company raised $400 million from Softbank at a $4 billion valuation last year, representing one of the largest fundraises from a private apparel company.  

"Most of the SoftBank investment went to reward early shareholders that believed in Vuori’s vision from day one," Kudla says, and not to fund growth.

Prior to last year, Vuori raised $47.5 million, including $45 million from Norwest Venture Partners in 2019 and about $2 million in 2017.

That would mean investors who sold their shares received a hefty return.

Yes, and: Of all the money raised, the total outside capital that went directly to Vuori's balance sheet was a mere $9.5 million, with the company largely bootstrapping itself from its own cash flow, it says in an email.

Be smart: Typically a capital raise of that size at that valuation might point toward an eventual IPO.

But Kudla says that while "going public is a viable path" the company "could someday take," it's not a path Vuori has committed to. 

He declined to elaborate. (Last year we saw a flood of retail DTC public offering filings, though this year's market is markedly different from 2021.)

What's next: Vuori is opening its first international store in London's Covent Garden after expanding its presence in wholesale and DTC in a number of overseas markets across Europe, as well as in China and Japan.

It plans to expand into outerwear in 2023, after seeing success in newly introduced categories such as women's swim, tennis and pickleball.

Of note: Kudla was recently named Entrepreneur of the Year by Ernst & Young for the Pacific Southwest.

1 big thing: Vuori charges ahead on expansion

Illustration of an athletic woman in workout clothes running with shopping bags.

Byte Kitchen, a high-tech restaurant startup, raised $6 million as it aims to bring food from independent restaurants to the masses through a single kitchen — its kitchen, Kimberly writes.

Why it's the BFD: Startups with so-called ghost kitchens — professional cooking facilities designed with food deliveries in mind — have drawn increasing investor interest as a way to provide food service without the overhead costs of running a facility. 

Driving the news: The seed raise, announced last week, was co-led by Crosslink Capital, Emergent Ventures and Lookout co-founder Kevin Mahaffey. 

Caviar co-founder Shawn Tsao and Black Bear Diner founder Bruce Dean were among the investors who participated.

Also last week, Byte cut the ribbon for its second "digital food hall" in San Carlos, California (joining its first San Mateo location).  

What's next: The company plans to use the funds to continue digitizing the back end of its kitchens, building its teams, and bringing on more restaurant partners, CEO Divyang Arora tells Kimberly.

Byte will also open more food halls as well, expanding deeper into the Bay Area and California, and eventually across the country, he says.

How it works: The San Mateo company's storefronts, known as Noshery Food Halls, partner with several local restaurants and license their menus, recipes and brands.

Byte cooks the food from its facilities using its own staff and equipment, as well as facilitates the food deliveries or pickup.

Customers can select a mix of items from multiple restaurants within a single order from its food halls, for delivery or pickup. 

Byte's mission is to help independent restaurants scale their brands without the burden of bearing all the costs associated with adding new locations, Arora says.

"It is truly an additional revenue stream," he adds. "There is no expenditure in terms of money or capital," for the local restaurants it works with.

State of play: Byte is one of a handful of ghost kitchen companies that have drawn investment dollars of late. 

San Francisco-based Local Kitchen raised $25 million last year, while Los Angeles-based Kitchen United snagged $100 million in a July Series C round.

The space has also seen some lofty bets — see Miami-based Reef's $700 million capital raise in late 2020, and Los Angeles-based CloudKitchens, which raised about $850 million in a November funding round valuing the startup at $15 billion.

Yes, but: While the ghost kitchen industry generated about $52 billion in sales in 2021, not all operators are faring well. New York-based Butler folded last month after raising $50 million since it was founded in 2016, TechCrunch reported.

2. The BFD: Byte Kitchen rides digital kitchen wave with new funding

Illustration of a fork and knife folded in a napkin made of a hundred dollar bill. 

Richemont will take a €2.7 billion hit after selling a majority stake in its e-commerce operation, Yoox Net-a-Porter, to online luxury platform Farfetch and Emirati investor Mohamed Alabbar’s investment group.

The move represents Richemont’s exit from online, a segment that was underperforming despite the luxury group’s heavy investment in it, the FT says.

Farfetch will take a 47.5% non-controlling stake in YNAP in exchange for Farfetch shares. Richemont will eventually hold a roughly 12% to 13% stake in Farfetch.

Alabbar, a longtime partner of Richemont in the Middle East, will take a 3.2% stake in YNAP.

Packable, a top-ranking Amazon seller behind Pharmapacks, an online retailer of health, personal care and beauty products, will lay off employees and shutter operations following a failed attempt to go public through a SPAC merger, CNBC reports.

The company cited failure to secure new financing as a reason for the move, CNBC says.

Bed Bath & Beyond has reportedly selected a lender to provide it with an asset-based first-in, last-out (FILO) loan, which was lined up by JPMorgan, but the size and terms were not immediately available, according to the Wall Street Journal.

JPMorgan declined to comment while Bed Bath & Beyond did not respond to a request for comment.

If the loan comes through, it could assure nervous vendors and provide enough liquidity for the retailer to build up inventory for and make it through the holiday season.

The company's shares are up more than 30% in morning trading on the news.

ICYMI: Keurig Dr Pepper is canning talks with Bang Energy, shying away from the prospect after news of a potential tie-up became public, Bloomberg reports.

3. Retail therapy

Illustration of Sigmund Freud holding a collection of shopping bags.

• EBay has acquired myFitment, a software tools provider for online automotive and power sports parts and accessories sellers. Financial details weren’t disclosed. https://axios.link/3Khrqx2 

• Qloo, a New York-based recommendation API, raised $15m in Series B funding co-led by Eldridge and AXA Venture Partners. https://axios.link/3AkZkMM 

4. Retail transactions

• Manscaped, the men’s grooming company, has promoted senior vice presidents Marcelo Kertész and Dave Estrin to CMO and chief revenue officer, respectively. https://axios.link/3KwDQS5 

• Quick service restaurant Krystal has named Casey Terrell as its CMO. https://axios.link/3KeE4gp 

• Saladworks parent WOWorks, has tapped Cole Thompson as its culinary vice president for Garbanzo Mediterranean Fresh, The Simple Greek and Barberitos Southwestern Grille. https://axios.link/3R32pb6 

5. It's Personnel

🚲 Situational awareness: Peloton inked a partnership with Amazon to sell some of its fitness equipment and accessories on the e-commerce platform. It's Peloton's "first foray outside of its core direct-to-consumer business," CNBC reports.

August 24, 2022

1 big thing: Vuori charges ahead on expansion