November 10, 2022
Happy Thursday, Retail readers.
🇺🇸 Programming note: Axios will be taking Veterans Day off tomorrow to show our appreciation for those who serve today and did so in the past.
👛 Situational awareness: The Consumer Price Index cooled more than expected in October. Still, inflation remains painfully high, Axios' Courtenay Brown notes.
1 big thing: Topicals treats itself with $10M raise
Topicals, the Los Angeles-based skin care brand for those who have chronic skin conditions, raised a $10 million Series A round led by Cavu Consumer Partners, its founder and CEO, Olamide Olowe, tells Richard.
Why it matters: Black Americans alone spent $6.6 billion last year on beauty products making up about 11% of the total market, according to McKinsey & Co.
- "Yet, despite significant spending by the Black community, the prospect of equity in the beauty industry, like in so many other industries, has been elusive," McKinsey said in its June report.
Details: In addition to Cavu, investors include Jay-Z's Marcy Venture Partners, Gabrielle Union, Kelly Rowland, Hannah Bronfman, Bozoma Saint John and Yvonne Orji.
- Proceeds will go toward buying inventory, though the brand has and intends to lean upon an inventory-backed line of credit for this purpose, Olowe says.
- The round will also be invested in marketing or cultural storytelling and hiring, she says.
- Following the Series A, Olowe will continue to own a majority stake in the business.
Of note: Olowe says she set out to create the Bath & Body Works version of the kind of skin care products you'd find in the ointment aisle of a CVS, yet formulated with people of color in mind.
- She points out that 75% of clinical trials for skin care products are for "white" skin tones and haven't been tested for efficacy on "darker skin tones."
- Olowe adds that people with skin issues are several times more likely to suffer from depression or mental health issues, a cause she actively supports.
- One of Topicals' best-selling products is its Faded Serum, which the brand describes as a brightening and clearing serum that treats dark spots and discoloration.
By the numbers: Two-year-old Topicals is the fastest-growing brand in Sephora, its exclusive retail partner, where sales are increasing 675% year over year, Olowe says.
- The brand also saw its revenue triple last year to reach eight figures. Olowe says it will repeat that pace this year, with revenue then likely to double next year.
- The Series A brings Topicals' total funding to nearly $15 million, Olowe says.
The intrigue: Olowe argues that a number of businesses forgot fundamentals and discipline in the flood of money in recent years.
- Digital is important for relaying the brand's message, but Olowe says she learned from Sundial's SheaMoisture and Paula's Choice that Topicals needs to be where the customer is, at festivals and in stores.