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BFD Expert Voices - Retail Deals

BFD Expert Voices

Beli, a DTC provider of prenatal vitamins, will likely raise a round of funding of up to $5 million in six to 12 months, CEO Joni Davis tells Richard exclusively.

Why it matters: With sperm health on a multi-decade decline, the startup is part of a growing trend to provide prenatal supplements to men as well as to women.

Details: The Kirkland, Wash.-based startup will invest the proceeds in growth initiatives, including product innovation and international expansion, Davis says.

Accelerating retail and SKU development is also top of mind.

Catch up fast: The company launched with $50,000, and then raised a mini-round last spring when it brought on VC partner Midnight Ventures, but has not raised a formal round, Davis says.

That provided enough capital, given the company is not burning through cash.

What they're saying: "When I started out, the goal was to make a better women's prenatal," Davis says.

That meant including nutrients such as choline to help with fetal brain development.

"Science is telling us a lot more about this process than we ever had access to before. The products have not kept up with it," she adds.

Zoom in: "But in all of this research, we found that men weren't being included in the conversation," Davis says, pointing to issues such as declining sperm quality.

"It really comes down to — I'm talking natural — is nutrient deficiencies and your lifestyle and your environment around you," Davis says.

With that in mind, Beli came out with one of the first men's prenatal supplements, because the sperm is responsible for preserving and carrying the DNA, she says.

What's next: Beli has new products coming out with postpartum health in mind, given that it can take years for women to fully recover from a pregnancy, Davis says.

Products tied to hydration, as well as conception and hormonal support, are also on the shortlist, she says.

For now, the company is focused on the areas of conception, pregnancy and postnatal.

However, Davis believes there will be opportunities to expand into products for babies, toddlers and children.

Of note: According to Davis, "every nutrient that goes into Beli has clinical research behind it."

The big picture: While M&A activity tied to vitamins and supplements has fallen slightly, according to investment bank Capstone Partners, the sector remains healthy.

Consumers continue to spend on health and wellness even as they cut back on other categories.

1 big thing: Beli eyes $5M for DTC prenatal vitamins

Illustration of a pregnancy test with a dollar sign appearing on the screen.

Rite Aid filed for Chapter 11 bankruptcy protection Sunday and said it plans to close "underperforming stores," Axios' Kelly Tyko writes. 

Why it's the BFD: The bankruptcy filing comes as it faces a multitude of lawsuits tied to allegedly filling unlawful prescriptions for controlled substances, including opioids.

Driving the news: Rite Aid said in a statement that it filed for bankruptcy protection in New Jersey and that it had reached an "agreement in principle with key creditors on the terms of a financial restructuring plan."

The company said it has received a "commitment for $3.45 billion in new financing to support business operations."

Jefferey Stein will be the new CEO and chief restructuring officer for the company, which operates more than 2,100 stores in 17 states.

The bottom line: This has long been more a matter of when, which may be why debt-laden Rite Aid tried to merge with Walgreens in 2017 and Albertsons in 2018, Dan Primack writes in Pro Rata.

The Philadelphia-based company's shares have fallen more than 84% over the past year, as it faces federal, state, and civil lawsuits tied to opioid prescriptions. Plus new competition from deep-pocketed rivals like Amazon.

What they're saying: Rite Aid may have been able to fend off bankruptcy via "an 11-hour capital grab," similar to companies such as GameStop and AMC, James Gellert, CEO of RapidRatings, tells Richard. 

Yes, but: "When you add the mounting risk of litigation, RiteAid decided it was better off to circle the wagons under bankruptcy and try to fend all this off in one swoop," he says.

What's next: RiteAid "will have to shrink down in multiple ways — namely, rid itself of non-performing locations and decrease leverage," Gellert says. 

"The biggest exogenous obstacle, though, will be the litigation exposure. This will have to be settled or largely resolved for RiteAid to have clarity on a post-bankruptcy future."

What we're watching: Per data provided by Fitch Ratings, distressed retailers to keep an eye on include Belk, Shutterfly, Petmate, Jo-Ann Stores and At Home Group.

2. The BFD: Rite Aid's bankruptcy filing

Illustration of a pen crossing out the "X" in the prescription symbol.

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

• Discount Tire, a retailer of tires and wheels, acquired the retail tire and automotive maintenance operations of Dunn Tire. https://axios.link/3PVT71D

• A&M Capital Partners and Highview Capital hired Harris Williams to explore a sale of GS Foods Group, an Ontario, Calif.-based food distributor that could fetch more than $1.5b (including debt), per Reuters. https://axios.link/3tzKDWF

• Spin Master Corp., a children's entertainment company, will acquire toy brand Melissa & Doug for $950m in cash. https://axios.link/3tAsvvK

• Grupo Calleja, an El Salvador-based grocer, agreed to buy French retailer Casino Guichard-Perrachon SA's stake in South American retailer Almacenes Éxito for $556m. https://axios.link/3FkyYxs

• Next (LSE: NXT) is in talks to buy fellow British fashion retailer FatFace for £115.2m. https://axios.link/3tqkdGz

• TAB Gida, operator of Burger King in Turkey, is preparing to raise upwards of $246m via an Istanbul IPO. https://axios.link/478SclJ

3. Retail transactions

• Jeffery Owen stepped down as CEO of Dollar General. Former Dollar General CEO Todd Vasos was appointed as CEO, effective immediately. https://axios.link/3PZyy4l

• Keith Berger was hired as senior director of IT for barbecue chain Sonny's BBQ. https://axios.link/3LYnx2k

4. It's Personnel

Situational awareness: Vista Outdoor plans to sell its sporting products business for $1.91 billion. 

📺 What we're watching: Richard began viewing the second season of "Loki," on Disney+, but will need to see more before rendering a verdict.

✏️ Many thanks to newsletter editor Claire Rychlewski and copy editor Mickey Meece for today's edits. Thank you for reading Retail Deals!

October 16, 2023

1 big thing: Beli eyes $5M for DTC prenatal vitamins