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BFD Expert Voices - Retail Deals

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Luum Precision Lash, which makes robots that apply eyelashes, will raise a Series A round between $15 million and $30 million, CEO Nathan Harding tells Richard exclusively.

Why it matters: Proceeds will be invested in producing a commercial machine in the U.S. and delivering it to retailers, salons and spas, Harding says.

Zoom in: Luum has several machines on order from independents and is in discussions with Ulta Beauty and Benefit Cosmetics, Harding says.

There is a trial taking place at an Ulta Beauty location in San Jose, Calif.

"The cost of the machine is covered by the customer as soon as it rolls off the line," Luum's president, Jo Lawson, says.

Revenue is generated from a software licensing fee every time the robot is used, she says.

By the numbers: The company has raised $15 million to date and counts Prisma Ventures, Ulta Beauty's digital innovation fund, as its key backer.

Other investors include former Drybar CEO John Heffner; former Philosophy CEO David Watson; former Rodan + Fields CEO Lori Bush; and former Lancôme CEO Odile Roujol, Harding says.

A machine costs about $125,000 to build and it will generate about $1 million in gross margin over its lifetime.

The big picture: A tight labor market and stalled immigration reform is spurring companies to develop technologies to satisfy the demand for workers.

Increasingly, advances in areas like robotics will come from investment in their commercial application, rather than from university research or defense spending.

Flashback: Harding is a career roboticist whose previous startup was Ekso Bionics (Nasdaq: EKSO), which makes human exoskeletons for use in rehabilitation.

While the technology had an emotionally powerful story to tell, it was difficult to sell, the CEO says.

Catch up quick: Harding says he got the idea for Luum after he learned about the eyelash industry when an adviser of his bought a franchise region of Amazing Lash Studio.

Eyelashes are glued on one at a time, which is a labor- and time-intensive process, an ideal use for robotics.

How it works: Leveraging AI, Luum's machine can complete 15 appointments per day compared with five for an eyelash artist, Harding says.

The robot is programmed to freeze and pull back the instrument if the customer, for example, sneezes and suddenly moves their head.

The feather-light instruments also easily dislodge if slightly bumped.

What's next: Lawson will become CEO while Harding will switch to CTO.

1 big thing: Luum raising Series A for eyelash robot

Luum's eyelash machine being used to apply eyelashes on a customer

Macy's board is running out of excuses when it comes to earnestly considering a newly enhanced buyout offer from activist investors Arkhouse and Brigade.

Why it's the BFD: Already under significant pressure, Macy's is also contending with an upcoming proxy contest, Kimberly writes.

Catch up quick: Arkhouse Management and Brigade Capital Management have increased their bid for Macy's by nearly $1 billion to roughly $6.6 billion yesterday.

Fortress Investment Group and One Investment Management US would contribute 50% of equity, and Arkhouse says it has identified large "institutional financing sources for each debt component of the transaction" for the rest.

The big picture: "It's really hard to make an argument that any department store is going to be … worth more in the future than it is today," says Steve Dennis, president of SageBerry Consulting.

Yes, but: Macy's CEO Tony Spring just took the helm last month, with a new plan to revamp product assortment, improve omnichannel, and close stores.

"It would be really hard, I think, for the current board to accept this offer when they've got a new CEO and they've got a new strategy in motion," Dennis says.

Plus, "legacy companies are more inclined to defend the status quo," Dennis adds.

Zoom in: Spring's plan, however, lacks discussion around customer dynamics and how they'll regain lost market share from customers fleeing to the likes of TJ Maxx, Ulta and Sephora, Dennis says.

💭 Our thought bubble: Spring's turnaround plan echoes prior plans the retailer has undertaken, to limited success.

What we're watching: Macy's could generate some profitability and value through asset sales and real estate monetization, says David Silverman, senior director at Fitch Ratings.

But long term that could come at the expense of investing in the company and ultimately lead to the company's essential liquidation.

"Maximizing a near-term shareholder opportunity that the board sees as possibly long-term damaging to the company as a whole is something that they would have to look at," Silverman says.

Between the lines: Initially, Macy's board said they didn't think the initial proposal's value was high enough, and questioned the legitimacy of the financing.

"When you solve the problem by increasing the value, now suddenly that requires more financing," Silverman says. "So in solving one problem, you might have actually exacerbated the other problem."

"The equity I think reflects some of those more recent challenges," Silverman adds. "Maybe from a valuation standpoint, the concerns are mitigated by, 'It's easier to make a bid right now relative to a time where the stock prices are higher.'"

Macy's did not respond to Axios' request for comment.

2. The BFD: Macy's pressure ramps up

Illustration of a paper bag with handles held by a fishing hook on a line

👀 The week ahead: Keep your eyes peeled for updates on Starbucks' proxy fight. 

🎣 Outdoor sporting goods company Vista Outdoor rejected an unsolicited $2 billion takeover offer from MNC Capital, saying a separate offer from Czechoslovak Group to buy its ammunition division is more favorable to shareholders, Bloomberg reports.

Vista chairman Michael Callahan said MNC Capital's offer undervalues Vista, in particular, the Revelyst outdoor products business, which is planned as a standalone.

MNC offered to pay $35 per share in cash but has not shown evidence of committed financing, Vista said.

🛍️ Specialty retailer The Children's Place said its majority shareholder Mithaq Capital will provide the company with $78.6 million of interest-free, unsecured and subordinated term loans.

The company appointed four Mithaq board nominees.

3. Retail therapy

an illustration of a hand in a meditative pose holding four orange shopping bags

Want more retail deals? Go deeper into our full database in the Axios Pro Deals Tracker.

• Raspberry AI, an N.Y.-based provider of design software for fashion design and merchandising teams, raised $4.5m in seed funding co-led by Greycroft and Khosla Ventures. https://axios.link/49PBlWf

• Unfabled, a London-based women's health startup, raised $1.6m in seed funding, with participation from Morgan Stanley, Exceptional Ventures, Atomico Angels, Founders Factory, Chai Ventures, Syndicate Room and 3 Sisters Ventures. https://axios.link/42YHQUt

• Moego, an L.A.-based payments and scheduling software company for pet groomers, raised $24m in Series A funding led by Base10 Partners, with Digitalis Ventures, Conductive Ventures, and Uphonest Capital also participating. https://axios.link/3PtrvBR

• Adena Partners acquired The Courier Guy, a South African-based provider of last-mile delivery services, alongside co-investors DEG, Proparco, and South Suez.  www.thecourierguy.co.za

• Larq, a smart water bottle startup, was acquired by Brita Group. https://axios.link/48ILtPw

• JAB is seeking to sell around 87m shares in Keurig Dr Pepper (Nasdaq: KDP), via a block sale that could raise upwards of $2.5b, per Bloomberg. https://axios.link/3V0C5nb

4. Retail transactions

• Heiko Schipper, a president of Bayer Consumer Health, has been named president of nutrition at Unilever. https://www.unilever.com/

5. It's Personnel

Welcome back from the weekend, Retail readers.

🎞️ What we're watching: Richard saw "Dune: Part Two" over the weekend, and highly recommends it.

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

March 04, 2024

1 big thing: Luum raising Series A for eyelash robot