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BFD Expert Voices - Retail Deals

BFD Expert Voices

Mars Petcare believes it can support a wave of innovation to help pet parents through its latest venture fund, Kimberly writes.

Why it matters: With a growing pet population — and a class of pet parents wanting to provide premium care for their furry loved ones — investment in the area has popped. 

Catch up fast: Earlier this month, the company launched its $300 million venture fund Companion Fund II, jumping off the success of its first fund, the $100 million Companion Fund.

The company is teaming up with Digitalis Ventures again to manage the fund.

Details: Mars will invest in founders working on breakthrough science technologies, products and services, all designed to advance the health and well-being of a pet, says Audrey Yoo, vice president of innovation, strategy and venture.

There will also be a focus on pet parents and pet professionals, including veterinarians.

Veterinary diagnostic or veterinary medicines, information tech and digital solutions are also fair game.

Zoom out: Most new pet parents are millennials and Gen Z, Yoo says.

"This new generation is very used to digital technology."

She adds, "Then you might know that pet spaces and veterinary spaces can use a lot of new digital innovation."

Zoom in: The first fund was more focused on seed investments, Yoo says.

With the new fund, it will invest in early-stage and growth-stage ventures.

Investments will be mainly in the U.S. and Europe, she says.

Of note: Yoo says one area she's excited to look at is artificial intelligence.

She sees the technology as a way to augment some work and remove some labor for veterinarians.

This could include voice detection, recordkeeping, smart symptom checking with chat assistance, and automating and routing solutions for vet mobile care support, she says.

The big picture: "We want all of our portfolio companies to be successful, whether that is from really being able to launch their first product or all the way to standing on their own, in the IPO stages."

Editor's note: This item has been corrected with Audrey Yoo's correct title — vice president of innovation, strategy and venture.

1 big thing: Mars Petcare wants to expand pet care innovation

Illustration of a dog wearing a cone made out of money.

In the wake of reports that it was for sale, Neiman Marcus saw inbound interest both from the public market and financial buyers, a source close to the situation tells Richard.

Why it's the BFD: The overtures give the Dallas-based luxury retailer confidence that it will have a robust sale process, the source says.

Of note: The retailer includes an IPO as well as a sale among its exit options, and a best-case strategy likely involves a dual-track process, the source says,

Yes, but: Market conditions and valuations aren't ideal — and with $1 billion in liquidity, Neiman Marcus isn't in a rush to exit, the source says.

By the numbers: Revenue overall was flat or down slightly, which in part reflects a decrease in luxury spending broadly, the source says.

While Neiman was still profitable in its most recent fiscal year, which ended July 29, the profit margin was in the mid-single digit rather than in the double digits, the source says.

A financial source said that EBITDA had declined to $240 million from $400 million.

It was previously reported that the retailer had about $5 billion in GMV and $495 million in adjusted EBITDA last year.

Flashback: In the years leading up to the pandemic, the luxury retailer strained under some $4 billion in debt.

That prevented it from reinvesting in the business, namely digital and store renovations while trying to fend off increasing competition.

Between the lines: Rumors have swirled for years that Neiman Marcus could merge with or be acquired by Saks and its owner, Hudson's Bay.

It's a storyline recently rehashed by the New York Post, which also reported months prior that the company was looking to sell its New York banner, Bergdorf Goodman.

A third source familiar with Neiman Marcus' thinking says sale options are discussed at the board level with the retailer's investment banker JPMorgan out of a fiduciary duty, but that's the extent.

It's possible one of the minority shareholders — either Sixth Street, Davidson Kempner, or Farfetch — may be agitating for some deal, the source says.

There are likely more than one or two potential buyers, including Hudson's Bay, looking to acquire Neiman Marcus at a discount, the source adds.

The big picture: It will be hard to predict how consumers will behave this holiday season, the source says.

On the one hand, employment remains strong and consumer spending is up.

On the other, geopolitical and macro events could negatively impact shoppers' mindsets, such as the Israel-Hamas war.

Neiman Marcus and Pacific Investment Management Co. declined to comment.  Sixth Street and Davidson Kempner did not immediately respond to a request for comment.

2. The BFD: Neiman Marcus not rushing to exit 

🔀 Unilever is shuffling its top ranks as CEO Hein Schumacher aims to right-course the company to restore its market competitiveness.

The company named Fernando Fernandez, its Beauty & Wellbeing business president, as its new finance chief. Priya Nair, the CMO of the division, will take over his role.

The company's president of nutrition, Hanneke Faber, and president of ice cream, Matt Close, will depart. Peter ter Kulve and Eduardo Campanella will fill those roles. Esi Eggleston Bracey was promoted to new chief growth and marketing officer.

Schumaker says he would stay clear of any major acquisitions for the time being, focusing the company's efforts on its top 30 brands, and paring other parts of the portfolio.

🍂 Archer Daniels Midland is turning sour on its alternative proteins production as consumer appetite wanes, CEO Juan Luciano told investors on an earnings call Tuesday.

The about-face would mean a $300 retrenchment of its plan to expand production of plant-based foods.

3. Retail therapy

Illustration of a therapy couch with a pillow made of money.

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

• BluBirch, a Bengaluru-based reverse supply chain management company, raised $6.37m in Series A funding led by Cornerstone Ventures and Capital2B Fund.

• PopUp Bagels, a New York-based bagel startup, closed an $8m Series A round led by Stripes. https://axios.link/3sbsePm

• Threedium, a New York-based provider of 3D/AR high-fidelity assets for e-commerce, raised $11m in Series A funding. Interpublic Group and Olma Partners co-led, and were joined by Mesh Consensys, Reflexive Capital, Nirvana Family Office, Lyra Ventures, Edenbase, and Kinisis Venture Fund. https://axios.link/3Fx03h6

• FounderSix, an influencer beauty brand incubator, raised $12m from KD Capital. https://axios.link/408ysMH

• L Catterton last year sold its 29% stake in Stamford, Conn.-based menswear brand Rhone to a group that included David Blitzer, Gabe Plotkin and Tim Tebow. https://axios.link/3QyW1Ly

• Pearl Street Equity acquired Famous Brands International, the Salt Lake City-based parent company of Mrs. Fields and TCBY.

•Restaurant Group (LSE: RTN), the Wagamama restaurant owner that recently agreed to be acquired for £506m by Apollo Global Management, said it's received an information request from PizzaExpress owner Wheel Topco for a potential takeover. https://axios.link/3Qc52IP

• PAI Partners-backed Marcolin SpA, an eyewear maker for brands including Tom Ford, is working with Goldman Sachs on a sale that could value the business at $1.43b, Bloomberg reports.

 • Midea Group, a Chinese maker of home appliances that has a market cap of around $51b on the Shenzhen exchange, filed for a Hong Kong float. https://axios.link/475PZqU

4. Retail transactions

• Jason Tarry, the U.K. CEO of British retailer Tesco, will step down in March 2024. He will be succeeded by Matthew Barnes, previously Aldi's U.K. and Ireland CEO. https://axios.link/3FzxXS8

• John Collins, a former Patagonia executive, was named CEO and board member of Johnnie-O, succeeding Dave Gatto, who plans to retire this year. https://axios.link/3QvJHvn

• Sean McMenamin, president of McMenamin Family Markets, was appointed chairman of Wakefern Food Corp. https://axios.link/3tTd41D

• Morgan Stanley said that Ted Pick, its head of investment banking and trading, will succeed James Gorman as CEO at year-end. https://axios.link/3McqtIM

5. It's Personnel

Situational awareness: The U.S. economy grew at its fastest pace in nearly two years in the third quarter, fueled by increased consumer spending. Go deeper

📚 What we're reading: Kim is picking up "Burn Rate," the memoir by Bonobos co-founder Andy Dunn.

✏️ Many thanks to newsletter editor Claire Rychlewski and copy editor Mickey Meece for today's edits.

October 26, 2023

1 big thing: Mars Petcare wants to expand pet care innovation