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BFD Expert Voices - Retail Deals

BFD Expert Voices

Home organization retailer Neat Method is raising capital this year, likely from angel investors, CEO Ashley Murphy tells Richard exclusively.

Driving the news: The company is celebrating one year since its founders bought back the business from previous owner Whitmor.

Of note: Even as other more established home organization retailers struggle, Neat Method sees an opportunity to consolidate the fragmented luxury space, Murphy says.

Details: "We have a few things in the pipeline for this coming year. More in the angel investor realm," Murphy elaborates.

An investor with knowledge of products and expanding internationally would be ideal, plus there is an opportunity to increase its marketing.

She declined to comment, however, on the amount.

Flashback: Neat Method was founded in 2010 by Murphy, Marissa Hagmeyer and Molly Graves, who all remain owners.

It sold a majority to Whitmor, a Mississippi-based maker of organization products, in 2017, which valued it at $1 million.

The company's valuation has since grown to $15 million.

Catch up fast: Once the founders reacquired the stake a year ago, they had to go through the process of de-integration, which meant securing their factory and warehouse.

"The fulfillment center transition along with some integral customer service updates have set us up for even more success for 2024," Murphy says, which will help the company process orders faster.

How it works: Neath Method provides luxury home organizing and relocation or moving services as well as organizational products.

While services and design are at the center of the business, products will eventually become a majority of sales.

It has franchisees in more than 95 cities and adds between 15 and 20 of those per year, but doesn't operate any stores.

By the numbers: The cash-flow positive company's revenue grew 15% year over year in 2023, Murphy says.

It was on track to generate some $15 million in sales tied to services alone last year.

The growth is due in part to new retail partnerships struck with West Elm and Crate & Barrel last year, joining a list that includes Bloomingdales, Nordstrom and Saks.

What's next: Neat Method is expanding into hospitality, with a handful of boutique hotels offering the company's products in their guest rooms.

"Our product team plans to launch around six new collections which will expand Neat into new areas of the home," Murphy adds.

It also sees an opportunity to partner with retailers who have an increasing interest in the home organization category via services.

1 big thing: Home organization brand Neat Method eyes fundraise

A neat method organizer containing toiletries

📈 Macy's shares rose about 4.5% after a report that Sycamore Partners was interested in acquiring the storied department store chain.

This comes after the retail chain snubbed an unsolicited offer from Arkhouse Management and Brigade Capital Management.

It has staved off prior takeover attempts from activist investors Starboard Value and Jana Partners, and Saks Fifth Avenue parent Hudson's Bay Co. in recent years.

💭 Kim's thought bubble: Macy's hesitance to shake hands on any of these offers underscores how much it believes its underlying assets are valued — not only for its real estate but also its lucrative e-commerce operations and brand IP.

👀 Shein's investors may be souring on an expected IPO.

Investors of the fashion giant are trying to sell shares in the private market that would value Shein at as low as $45 billion, according to Bloomberg. Shein is targeting as much as $90 billion in its U.S. IPO.

This reflects concerns over increasing competition and regulatory scrutiny.

💊Walgreens is considering selling its specialty pharmacy business, Shields Health Solutions, for a deal that could fetch it more than $4 billion.

The move would underscore an about-face, having just doubled down on its investment in Shields less than two years ago, our Health Tech Deals colleagues write.

🙅Farfetch's deal to get taken private by South Korea's Coupang is under fire.

An ad hoc group — dubbed "2027 Ad Hoc Group" — which holds more than 50% of Farfetch's 2027 convertible notes, has coalesced to challenge the deal.

The Coupang deal will in effect wipe out Farfetch's shareholders' investments.

The ad hoc group says it "has serious concerns about how Farfetch went from guiding the market to YE 2023 liquidity of over $800 million in August 2023 to a distressed sale four months later."

The group has hired Pallas Partners as legal counsel and Ducera Partners as financial advisers.

2. Retail therapy

Illustration of a Rorschach inkblot showing shopping carts reflected on either side.

Monday, Jan. 22: Midmarket firms expect M&A rebound and Macy's rejects $5.8B takeover bid. Read the newsletter.

C16 Biosciences raises $4.5M to expand into food

Yellow Wood reportedly close to acquiring ChapStick

Chunk Foods raises $7.5M seed extension to fuel growth

Yellow Wood inks $510M deal for ChapStick brand

3. Catch up quick

• Krepling, an e-commerce channel management platform, raised $3.3m in seed finding. Bull City Venture Partners led, and was joined by Launch, Brickyard, Front Porch Ventures, 11 Tribes Ventures, Colabora Ventures, and Broadshade Investments. www.krepling.com

• Ultra Violette, an Australian SPF-based skin care brand, raised AUD$15m from Aria Growth Partners. https://axios.link/496d9yE

• Aniai, a South Korean maker of burger-grilling robots, raised $12m. InterVest led, and was joined by SV Investment, Ignite Innovation, and insider Capstone Partners. https://axios.link/3u6Xq3j

• Fengate Private Equity acquired Saco Foods, a Middleton, Wis.-based maker of shelf-stable foods under brands like California Sun Dry and Dolci Frutta, from Benford Capital Partners. www.sacofoods.com

• Fort Point Capital acquired Ice House America, a Moultrie, Ga.-based automated retail ice and water platform, from Ulysses Management. www.icehouseamerica.com

• Eurazeo acquired a minority stake in French fragrance brand Ex Nihilo for €25m. https://axios.link/3U32osy

• Olympus Partners hired Morgan Stanley to find a buyer for Rise Baking Co., a Minneapolis-based bakery that could fetch around $2.5b (including debt), per Reuters. https://axios.link/429Bnpc

• EU regulators are set to block Amazon's (Nasdaq: AMZN) proposed $1.7b takeover of Roomba maker iRobot (Nasdaq: IRBT), per the WSJ. https://axios.link/3vSILsY

• ADM (NYSE: ADM) completed its purchase of Revela Foods, a New Berlin, Wis.-based maker of dairy flavor products, from New Heritage Capital and GMB Capital Partners. https://axios.link/3GUs56A

• Doherty Enterprises has acquired 21 Applebee's restaurants throughout the NYC metro area from franchisee rival Apple Metro. https://axios.link/3OdTPaI

• Cordillera Investment Partners raised $62m for a fund that will buy whiskey barrels as institutional assets. www.cordillera-ip.com

4. Retail transactions

• Grant Knudson has joined Solace Capital Partners-backed Sun Mountain Sports as president and chief brand officer.

• Andrea O'Donnell, the CEO of L Catterton-backed Everlane, has left the company to become brands president of Keds and Vince Camuto parent Designer Brands. https://axios.link/47P5nIq

• Nancy Green, formerly CEO of Athleta, will join Beyond Yoga as CEO, replacing co-founder Michelle Wahler, who is stepping down. Beyond Yoga's COO and CFO Jesse Adams is also leaving. https://axios.link/3u1n61p

• Daniel Mathieson was named president of the Americas at Driscoll's. https://axios.link/3Oeu89S

• Jed Kleckner was appointed to the board of short-term rental startup Summer. https://axios.link/496dS2Q

• Andrew Laurence was named CEO of Vitamin Shoppe parent Franchise Group, succeeding Brian Kahn, who led a consortium to take the company private last year. https://axios.link/4b98Ggj

5. It's Personnel

Situational awareness: Michelle Bernstein, a James Beard-award-winning chef and restaurateur, is joining us for BFD Miami on Feb. 13. Request your invite.

👩‍🍳What we're cooking: Kim made dolmades, a Greek stuffed cabbage with meat and rice, for an Axios potluck party.

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

January 26, 2024

1 big thing: Home organization brand Neat Method eyes fundraise