It’s been another week with far more retail news than there is time in the day. Below, we break down some things you may have missed during the week and what we’re still thinking about.
From Fenty Beauty’s ketchup and lip gloss launch to Peloton’s Q4 net loss widening by 297%, here’s our closeout for the week.
What you may have missed
Belk sued GameStop and its new COO over poaching
On Monday, Belk sued former CEO Nir Patel and his new employer, GameStop, over accusations of poaching. In its complaint, Belk alleged that Patel, on joining GameStop as chief operating officer, “commenced a campaign to solicit some of Belk’s most senior employees to resign from Belk and join him at GameStop — despite the fact that Patel had agreed, for a period of twelve months after his departure from Belk, not to solicit, recruit, or hire Belk’s employee.”
Belk also accused Tim May, a former senior supply chain executive at the department store chain, whom Belk said was poached by GameStop and Patel, of stealing confidential information from Belk. GameStop and Patel have not responded to the complaint against them yet.
Revlon shareholders lost in bankruptcy court
The federal judge overseeing Revlon’s bankruptcy case denied a request by some stockholders to form their own committee to advocate for their interests in the beauty giant’s Chapter 11 case. The shareholder group argued that Revlon’s stock price - which surged in bankruptcy despite the likelihood of investors being left empty handed in Chapter 11 - was evidence that the company was solvent. The motion to form a committee was opposed by Revlon, its lenders and its unsecured creditors.
In opposing the stockholders’ request, the committee of unsecured creditors noted that Revlon had yet to put forward a long-term business plan or reorganization deal, and the company is still working to stabilize its supply chain and operations. “The present stock trading price is, in turn, an inherently unreliable indicator of Revlon’s business worth,” the committee said.
Richemont unwinds its digital strategy, unloading Yoox Net-A-Porter stake to Farfetch
Luxury e-retailer Farfetch and Dubai Mall developer Mohamed Alabbar’s investment vehicle Symphony Global will acquire a 50.7% stake in luxury e-retailer Yoox Net-A-Porter from Cartier-owner Richemont. With Farfetch taking 47.5%, Yoox Net-A-Porter will be “a neutral platform with no controlling shareholder,” according to the companies’ press release.
Richemont characterized the step as a culmination of its online ambitions, but it unwinds much of its e-commerce strategy, including its 2018 $3.4 billion acquisition of Yoox Net-A-Porter and its 2020 partnership with Chinese e-commerce giant Alibaba, which entailed pouring over a billion dollars into Farfetch. As part of the deal, Yoox Net-A-Porter and Richemont will employ Farfetch Platform Solutions, but the new setup has upsides for both players, according to Wedbush analysts led by Tom Nikic.
“Richemont's 2018 acquisition of YNAP clearly has not paid off for them, given that they took a writedown of 2.7 billion euros in conjunction with today's news,” the analysts said on Wednesday. “That said, [Farfetch] believes that they can help right the ship, by moving from a traditional 1P model to a hybrid 1P/3P model, as well as leveraging [its] success with younger, global customers.”
Retail Therapy
Fenty Beauty launches new lip gloss...and ketchup
Ketchup can be a polarizing condiment, but Fenty beauty’s latest makeup release is meant for true fans.
On Monday, Fenty Beauty - founded by music star Rihanna - announced a lip gloss collaboration on Instagram with MSCHF showing models applying red lip gloss from a ketchup packet. A $25 box set available for purchase on a dedicated website contains six packets that are either ketchup or lip gloss. Think of it as a sort of mystery box, but just make sure you don’t consume the lip gloss by accident.
MSCHF is a creative collective that collaborates with several brands and celebrities to create unique and sometimes controversial products. It is famously known for working with Lil Nas X to make Satan Shoes containing one drop of human blood.
Ketchup has never been so versatile - or expensive.
What we're still thinking about
297%
That’s how much Peloton’s net loss widened this quarter as the retailer continued to post revenue declines and operating losses. The fitness company is attempting to stop the bleeding by raising prices on products, laying off employees (twice this year according to the most recent report) and broadening its distribution to Amazon (the first time the company has sold outside of its own channels). Peloton is also reportedly planning to shutter many of its stores. The company’s new CEO, who came in just this February, says the company is making “significant progress” on its turnaround despite what many might see as a “melting pot of declining revenue, negative gross margin, and deeper operating losses.” His words, not ours.
20,000
That’s how many temporary team members Party City plans to hire in advance of the highly anticipated Halloween holiday, outpacing its 2021 seasonal hires of 17,000.
The theme party retailer said employees will work in 750 stores and 150 popups nationwide, and touted “flexible hours, competitive wages and a generous 30% employee discount.” A national hiring event is planned for Aug. 30 from 10 a.m. to 5 p.m. at all stores. Party City was forced to lower its guidance this year after it took hits to its sales and profit margins due to a helium shortage - the retailer is big on balloons. Still, the company said it expects to offer permanent employment to approximately 10-15% of the temporary employees at the end of the season.
What we're watching
Will suppliers take a chance on Bed Bath & Beyond?
Last Friday, Bloomberg reported that some suppliers to Bed Bath & Beyond have stopped or restricted shipments after the retailer fell behind on payments.
Four days later, The Wall Street Journal reported that the company found a lender to stabilize its finances. The loan was obtained in part to help ease relationships with vendors so they continue to ship goods.
S&P Global Ratings dropped Bed Bath & Beyond’s credit rating on Monday to CCC from B-, stating that the company has, “mounting challenges, including very poor sales performance, deteriorating liquidity, and looming maturities.
