FINANCE

Stitch Fix files for IPO

BY Deena M. Amato-McCoy

Apparel subscription service Stitch Fix is ready to go public.

The company filed for an initial public offering on Thursday. Stitch Fix, which had 2 million active members as of July 27, according to its S-1 filing, reported revenue of nearly $1 billion for 2017.

Stitch Fix launched in 2011. Since then, it has raised $42.5 million in venture capital from firms like Benchmark, Structure Capital, and Baseline Ventures. The company is seeking $100 million from its IPO, according to Business Insider.

Stitch Fix continues to attract shoppers based on the element of personalization. Customers fill out an online profile that illustrates their personal style, from fashion categories to cost thresholds. The company uses a custom-built, Web-based styling application that provides recommendations across its broad selection of merchandise. Stitch Fix stylists then apply their judgment to select what they believe to be the best items.

Boxes are filled with personalized items to try on, along with a prepaid return label. The styling fee per box is $20, but the fee goes toward anything the customer purchases in the box, according to Business Insider.

By relying on stylists’ input, the company is able to add “a personal touch,” offer styling advice and context to each item selected. It also helps Stitch Fix develop long-term relationships with clients, the filing reported.

“We strongly believe that most existing retail constructs are insufficient and out of date,” Katrina Lake, founder and CEO of Stitch Fix, said in the filing.

“We also believe our model of personalization, getting to know every client, each product, and generating relevant and actionable recommendations, to be superior and enduring, especially for the many people who hate to shop,” she added. “I believe we are the best in the world at personalizing in apparel at scale, but I also know that we are just at the beginning of how powerful personalization can be.”

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FINANCE

Supervalu ends Q2 with sales bump, and acquisition

BY Deena M. Amato-McCoy

Supervalu is kicking off the second half of its fiscal year with an acquisition.

The company is acquiring Associated Grocers, a transaction valued at approximately $180 million. The deal will give Supervalu the ability to expand its operations into a new part of Florida, and bring the company’s products and services to Associated Grocers’ diverse customer base in South Florida, the Caribbean, and other international markets.

Also part of the pending transaction, Supervalu has reached a long-term supply agreement with Associated Grocers’ largest customer that will go into effect upon the closing of the transaction, the company reported.

During Associated Grocers’ last fiscal year, which ended on July 29, the company’s revenues were approximately $650 million. This is an estimate by Supervalu under its accounting policies.

The news comes as Supervalu reported a sales increase for its second quarter. For the ended September 9, the company reported net sales of $3.80 billion, a 35% increase compared to $2.81 billion last year. This surpassed FactSet estimates of $3.79 billion.

The company reported a net loss from continuing operations of $25 million, which included a $27 million after-tax asset impairment charge and $16 million of after-tax merger and integration costs. When adjusted for these items, second quarter fiscal 2018 net earnings from continuing operations were $18 million, or $0.46 per diluted share. This also beat the FactSet consensus of $0.36.

Second quarter wholesale net sales were $2.74 billion, compared to $1.73 billion last year, an increase of 58%. Retail net sales were $1.02 billion, a 1.1% increase compared to $1.03 billion last year. The net sales decrease reflects identical store sales of negative 3.5% and closed stores, partially offset by sales from acquired and new stores.

“We continue to make tremendous strides in driving our strategy, evidenced by another quarter of strong growth from our core wholesale business which now represents over 70% of net sales,” said Supervalu president and CEO Mark Gross. “Additionally, our results now include the benefit of Unified Grocers, where I’m pleased that the transition is going well. We have a lot to be excited about as we turn our focus toward the back half of our fiscal year.”

Looking ahead, Supervalu expects fiscal 2018 net earnings from continuing operations to be in the range of $31 million to $50 million. Adjusted EBITDA, including the contribution from Unified Grocers, is expected to be in the range of $475 million to $495 million, according to the company.

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Report: Bon-Ton suppliers start to pull back shipments

BY CSA STAFF

Despite its turnaround plans to improve sales, Bon-Ton Stores is facing obstacles among its suppliers.

The department store chain’s suppliers are scaling back shipments and asking to be paid sooner. Suppliers expect these measures to protect them if the department-store chain falls short on its turnaround plans, according to Bloomberg.

Bon-Ton has been working with its vendors to build inventory ahead of the holiday season. Yet, companies are still insisting that they get paid with letters of credit or cash on delivery — an issue that could strain the company’s resources, the report said.

Despite the struggle, Bon-Ton continues to move forward with plans to unload more than $1 billion in debt. One initiative is an $18.9 million sale-and-leaseback transaction for a store in Roseville, Minnesota. This plan is expected to boost liquidity in the short-term and buy the company some breathing room, Bloomberg said.

To read more, click here.

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