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BFD Expert Voices - Retail Deals

BFD Expert Voices

Klaviyo's first-day IPO showing bodes well for companies seeking to tap the public markets in the months ahead, Kimberly writes.

Why it matters: Consumer-focused IPOs are entering the public fray, and Birkenstock is set to take its stage with its IPO filing last week.

As Axios' Dan Primack notes, there's also a wave of SaaS companies in the IPO pipeline.

Driving the news: Klaviyo jumped as high as $39.47 in its public market debut before closing at $32.76 yesterday above its $30 IPO price.

The company raised about $576 million from the offering.

What they're saying: "Klaviyo is among the first tranche of VC-backed tech companies to test the IPO market, and could be the beginning of a larger number of lesser-known names to justify their place in public markets," PitchBook's senior emerging-tech analyst Derek Hernandez says.

Zoom out: Industry watchers say that Klaviyo's IPO is a useful benchmark for valuation.

Hernandez says that companies that have gone public so far have taken a "conservative approach," and that has paid off.

"It also shows that the stigma of a financially down round may not be there," Simon Wu, a consumer and software investor at Cathay Innovation, tells Axios.

It gives founders "a North Star they want to achieve, or at least those that have similar financials [can] know where they would price," Wu says.

Its success "will kind of improve things in respect to animal spirits for the investment sector," Hawke Ventures managing partner Clark Landry says.

Zoom in: Shopify invested $100 million in Klaviyo last year and has a nearly 12% stake in the company following the offering.

"That was kind of what helped propel them," Wu says.

Nearly 78% of its annual recurring revenue comes from customers who use Shopify's platform.

"They clearly have a lot of room to grow if you're long on e-commerce, but I think they have some logos that they mentioned that they are moving upmarket," he adds. "And there are other areas where their key technical partners, kind of like Klaviyo, that is just top of mind for other pieces of running your business."

Of note: Klaviyo is trading just above $34 early in its second day, and Instacart is trading just above its $30 IPO price on Day 3.

1 big thing: Klaviyo IPO offers valuation benchmark

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Unilever may be reviving a sale of non-core personal care brands led by Q-Tips, Reuters reports citing sources.

Why it's the BFD: It would be the CPG conglomerate's second attempt at unloading its Elida Beauty portfolio in as many years, Richard writes.

Details: Elida includes brands Impulse, Caress, TIGI, Timotei, Monsavon, St. Ives, Zwitsal, Ponds, Brut, Moussel, Alberto Balsam and Matey, per Reuters.

The seller has restructured Elida to be more of an autonomous unit so it is a more appealing target.

The unit generated $760 million in sales in 2022.

Unilever hired investment banks Morgan Stanley and Evercore to lead the process, per Reuters.

The latest: The financial advisers are now reaching out to prospective buyers, including private equity, to gauge interest for what could be a multibillion-dollar deal, also per Reuters.

Flashback: In 2021, Unilever hired investment bank Credit Suisse to sell the businesses but abandoned the process.

Catch up fast: Hein Schumacker took Unilever's reins this summer after being hired in late January, and this could be seen as the CEO's first big strategic move.

Note that Unilever has been under pressure in recent years to prune its sprawling portfolio of food and personal care businesses.

Even the company has said it wants to focus on higher-growth businesses while selling off slower-growing ones.

To boot, Nelson Peltz, the head of hedge fund Trian Fund Management, who is famous for getting companies to do exactly that, joined the conglomerate's board last year.

Be smart: Consumer conglomerates don't exact many synergies from marrying large food holdings with personal care.

Unilever lags behind U.S. counterparts, namely Procter & Gamble, when it comes to rationalizing its holdings.

Plus, over the past decade, there's been fallout from competition posed by DTC brands after decades of shelf dominance at retailers from Walmart to Kroger.

The bottom line: If the sale proves successful, it could spur Unilever to part with other brands it has toyed with selling, such as ice cream.

Unilever, Evercore and Morgan Stanley declined to comment.

joined the conglomerate's board last year

2. The BFD: Unilever setting up second effort

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Want more retail deals? Search the Axios Pro Deals Tracker beta.

• Flash.co, an Indian lifestyle app for shoppers, raised $6.7m in a pre-Series A round co-led by Blume Ventures and PeerCapital. https://axios.link/3sXy2Mt

• LesserEvil, a Connecticut-based organic popcorn and snack company, announced a minority investment from Aria Growth Partners. https://axios.link/4517I1r

• Alibaba Pictures, a listed film investment and distribution unit of Alibaba, is acquiring Chinese live events firm Damai for $167m. https://axios.link/3Rumlaw

• Delivery Hero confirmed it is in talks to sell its Foodpanda business in several Southeast Asia countries. https://axios.link/48kE9L4

3. Retail transactions

• Tim Cofer, CEO of Central Garden & Pet Company, will join Keurig Dr Pepper as COO in November, with a planned transition to CEO in Q2 2024. https://axios.link/46grIy3

• Justin Field has stepped down as chief strategy officer for the National Venture Capital Association, to work full time on a climate tech startup he recently launched.

4. It's Personnel

✨ Kim is wrapping up her time at Groceryshop in Las Vegas.

🐶 Situational awareness: The European Commission has approved Apollo Management's investment in PetSmart. BC Partners, GIC and management will retain a majority.

📺 What we're watching: Richard has been weirded out, in a good way, by Apple TV+ horror series "The Changeling."

✏️ Big thanks to editor George Moriarty and copy editor Mickey Meece for today's edits.

September 21, 2023

1 big thing: Klaviyo IPO offers valuation benchmark