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BFD Expert Voices - Retail Deals

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Publicly traded fintech Affirm struck a strategic partnership with returns startup Loop Returns and will shutter Returnly, a company it acquired for $300 million just two years ago, Pro Fintech Deals' Ryan Lawler writes.

Why it matters: As it focuses on its core business and profitability, the partnership lets Affirm exit the returns business while maintaining a stake in the sector.

💭 Kim's thought bubble: Returns accounted for around $816 billion in lost sales for U.S. retailers last year,  per an NRF and Appriss Retail report, spurring a wave of investment.

About $179.5 million rushed into the post-purchase space, which includes returns, fulfillment and delivery, and loyalty and incentives, according to PitchBook.

What’s happening: Affirm plans to sunset Returnly by October and will work to transition merchants using its platform to Loop Returns.

In return, it will take an equity stake in Loop, which has raised more than $100 million in funding to date.

How it works: Loop Returns founder Jonathan Poma says his team has been working with Affirm to make it as seamless as possible for merchants to switch.

"A merchant, if they opt-in, can essentially send all of their Returnly software settings... to Loop," Poma says.

To ease the process, Loop's R&D team built a tool to map those settings to the returns language it uses.

Flashback: Affirm acquired Returnly in early 2021 for $300 million in a mix of cash and equity.

Not long after, PayPal bought competitor Happy Returns.

The other side: Loop Returns decided to stay private instead, raising a $65 million Series B round led by CRV, with participation from strategic investor Shopify.

In describing that decision, Poma said, "I think leaving a business with our product-market fit, our customer base, and the partners we [had]... would have been selling the company short."

"There's a whole lot of TAM that someone's going to go capture and I believed that we could be the winner," he added.

The big picture: Affirm, on the other hand, decided that a returns business was a nice-to-have and not a must-have for its business, particularly in a rough environment for publicly traded fintech companies.

1 big thing: Affirm exits returns through strategic partnership with Loop Returns

Illustration collage of an open cardboard box sitting above shipping containers and geometric shapes

Private equity firm L Catterton is weighing strategic options, including an initial public offering, for its Birkenstock brand, Bloomberg reports, citing sources familiar.

Why it's the BFD: The fact that an IPO is on the table is a sign investors may be warming up to the public markets again, after recent strong debuts by Mediterranean fast food chain Cava and Korean barbecue concept Gen Restaurants Group, Kimberly writes.

Details: German footwear company Birkenstock could be valued at over $6 billion in an IPO, per Bloomberg.

Goldman Sachs and JPMorgan are serving as advisers on a potential U.S. listing, according to Bloomberg.

The IPO’s timing could come this year or next year.

Context: L Catterton, which is backed by LVMH, and Financière Agache, the family investment company of LVMH’s Bernard Arnault, acquired a majority stake in Birkenstock two years ago at a valuation of about $4.8 billion.

JPMorgan and Goldman Sachs declined to comment. Representatives at L Catterton and Birkenstock couldn’t immediately be reached for comment.

2. The BFD: L Catterton’s Birkenstock weighs IPO among strategic options

Photo: Jeffrey Greenberg/Universal Images Group via Getty Images

• eFishery,an Indonesian aquaculture startup, raised $200m in Series D finding at a valuation north of $1b. 42XFund led, and was joined by Diperbadankan, ResponsAbility, 500 Global and insiders Northstar, Temasek and SoftBank. https://axios.link/44fitNV

• Blackstone invested in Lazeo, a French provider of aesthetic medicine services. https://axios.link/3D6UGDO

• Tattooed Chef will file for Chapter 11 bankruptcy and intends to pursue a sale of substantially all of its assets. https://axios.link/3PMkwEN

• Do Good Foods, a New Jersey-based chicken processor, has filed for Chapter 11 bankruptcy protection. https://axios.link/3PN6qDd

3. Retail transactions

• Rob Sands, the chairman of Corona beer parent Constellation Brands and a former CEO of the company, will step down from his role but will remain a member of the board. https://axios.link/43eSEfC

4. It's Personnel

Here's your recap of what we've covered this week:

July 5 — Neiman Marcus reinvests in business, unveils hybrid workspaces; PE firms circle FIS unit Worldpay; Mars to acquire Kevin's Natural Foods for $800m. Read the whole newsletter.

July 6 — Teleperson looking to raise $2.5m; Investcorp positions IPO launch. Read the whole newsletter.

5. 🗞️ Catch up quick

🎩 Hat tip to newsletter editor Claire Rychlewski and copy editor Mickey Meece for today's edits.

🙏 Thank you for reading Retail Deals. Catch you again Monday!

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July 07, 2023

1 big thing: Affirm exits returns through strategic partnership with Loop Returns