Hi, and welcome back to Line Sheet.
Today, Rachel “ Rachel@puck.news” Strugatz is here with some big news about Glossier’s latest fundraising round. For the past year, Rachel has been carefully tracking every little move the executive team has made—from entering Sephora to launching two fragrances at once—with a healthy level of skepticism. Now, it’ll be clear to everyone that it was with good reason.
I wonder how closely the team at Rhode is studying Glossier’s trajectory as Hailey Bieber’s brand reportedly explores a sale. Rachel has thoughts on that up top. Plus, my analysis of the significant restructuring at Victoria’s Secret and a note on the acquisition of Lyst by Japanese retail giant Zozo.
And yes, the tariffs are coming. I’m obviously not going to share blanket advice here because you’re smarter than that, but I loved what Imaginary managing partner Nick Brown and designer-founders Maria McManus and Todd Snyder had to say last night during our conversation at the 610 Loft & Garden at Rock Center, which, as you probably know, has been redeveloped over the past five years or so by the taste arbiters working behind the scenes at owner Tishman Speyer. (I’m genuinely a massive fan of what they’ve done up there; thanks to Steph Mark from Tishman Speyer and my guy Eric Van Gelder at Puck for organizing.)
We’ll have more on the chat—which covered a lot of ground, from the fallout of the D.T.C. revolution to the advantages of starting a biz here in America—next week. But on the tariffs front, the consensus was: Yes, of course this is a big deal, but it’s just one of many big deals.
Mentioned in this issue: Victoria’s Secret, Hillary Super, Sri Lankan bras, Adam Selman, Janie Schaffer, Lyst, the Zozosuit, Rhode, tariffs, Glossier, Emily Weiss, Kirsten Green, Kyle Leahy, Kleo Mack, Target, Ulta, and many more…
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Three Things You Should Know...
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- Think Pink?: Yesterday, Victoria’s Secret’s still-new C.E.O., Hillary Super, unleashed a series of announcements that walked back significant structural changes made by her predecessors. In recent years, the lingerie giant (which I co-wrote a book about, lest you forget) brought its three businesses—the main line, the younger-skewing Pink, and the beauty division—under one leader in an effort to streamline operations. Now, Super has reversed that process, promoting head merchant Anne Stephenson to run the Victoria’s Secret brand, poaching Ali Dillon from Alex Mill to run Pink (the growth engine of the group at one point), and bringing in Amy Kocourek (from Austin-based jeweler Kendra Scott) to lead beauty. Notably, all three are women. But, historically, Victoria’s Secret has been run mostly by women, even if the men—Les Wexner, Ed Razek, et al.—were the ultimate decision-makers. That’s no longer the case.The market’s reaction to Super’s changes was… muted. Victoria’s Secret needs to continue improving its margins, and I don’t think investors care much how Super does it. (Here’s hoping, for Victoria’s Secret’s sake, that Sri Lanka and the U.S. can make a new trade deal, because it’s the center of the world for bra manufacturing.) If Super believes the new structure is the right way forward, then so be it. Stephenson is well-regarded internally, but both she and Dillon will be under tremendous pressure given the poor state of Pink, which has failed to connect with this generation’s tweens and teens.Yet another challenge is the sorry state of Victoria’s Secret’s marketing. Super has appointed designer Adam Selman to run creative, effectively replacing Raúl Martinez, who ran screaming back to Vogue and Condé Nast after multiple blunders made in-house at VS. (Were they Raúl’s fault, really? Probably not. But he was the man on the ground.) Selman is a designer, first and foremost, but design won’t report to him—and he’ll report to the yet-to-be-named C.M.O.
Nevertheless, my guess is that Selman—who, like Super, came from Savage x Fenty, Rihanna and TechStyle’s VS competitor—will eventually be handed the keys to design… or at least given some authority over it. It just so happens that Janie Schaffer, Victoria’s Secret’s chief design officer, is leaving the business. I’d wager that Super doesn’t replace Schaffer but instead gives the merchants more control, as Fran Horowitz did at Abercrombie & Fitch. Marketing and product need to work hand in hand, and I think we’ll see more retail companies empowering creative directors to have hands in both departments.
Anyway, this was all happening amid unsubstantiated takeover speculation last month. In a series of transactions, including another last week, VS investor BBRC Worldwide increased its stake to over 10 million shares, or about 13 percent of the company. For years, I’ve said that Victoria’s Secret seemed like an excellent take-private candidate. (It still holds substantial market share and would benefit from some cosmetic investments that the public market may not appreciate.) Visiting the new Skims store in Los Angeles clarified this stance for me. Whether or not you’re a fan of Vanessa Beecroft’s griege scale (Kim Kardashian & Co. sure are), there’s no denying that they are beating VS not only at merchandising and marketing, but on the product itself.
- A pretty good outcome, given everything: Lyst, the fashion search engine, announced this morning that it had been acquired by Zozo, owner of Zozotown, Japan’s largest online clothing retailer, for $154 million in cash. Most of the headlines here will be about the fact that Lyst raised $85 million four years ago at a $700 million valuation. (In all, the company had raised $206 million.) But 2021 was a long time ago, the market has changed, and this acquisition allows Lyst—whose quarterly trend reports have become essential to big brands—to keep moving forward with further investment from Zozo, a company that has tried desperately to meaningfully enter the Western market in the past and failed (Google “Zozosuit”).
- Rachel on the Rhode less traveled: Here we go again with the billion-dollar beauty valuations. Last week, amid reports that Hailey Bieber’s Rhode tapped JPMorgan Chase and Moelis to explore a sale process, it emerged that the brand was now valued at $1 billion. This makes sense, I guess, given that I heard last year that Rhode was valued at $500 million, and revenue approximately quadrupled from 2023 to 2024––but have we learned nothing from Pat McGrath Labs and Glossier? (See below…) Valuation is often a nonsense number that puts a target on a company’s back and creates unrealistic expectations.Alas, ego often trumps reason, and in this instance, I was told that someone at the brand was actually hoping for a valuation higher than the reported $1 billion. Rhode is one of the most successful celebrity beauty brands (or beauty brands, period) to come around in years, but I’m not sure if anyone is paying more than a $1 billion for a newish, celebrity-driven anything in the current M&A standstill and amid the tariff albatross, which is wreaking havoc on a beauty industry almost wholly reliant on overseas manufacturing. —Rachel Strugatz
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And now, on to the Glossier news…
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Four years after a Series E that valued Glossier at nearly $2 billion, the millennial beauty brand is seeking more capital from investors, this time at a valuation “south of a billion dollars.”
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Back in 2021, Glossier opened a handful of sprawling, Disneyland-like beauty stores, including a 4,500-square-foot “mushroom trip”-themed Seattle outpost and a Los Angeles flagship that took up nearly an entire block on Melrose, along with an adjacent “Glossier Alley” outdoor space and café that served $9.90 Glossier Pink Iced Lattes. These were high times indeed. Glossier had just closed a Series E that valued the company at close to $2 billion, with a cap table that included Thrive, Index, Forerunner, and Sequoia—a consortium of investors that has poured a total of $266 million into founder Emily Weiss’s millennial pink empire. It was an extraordinary pile of cash for a beauty brand. (Companies like Rhode and Rare have thrived on a fraction of that amount.)
It didn’t seem to matter that Glossier wasn’t profitable, or that sales had declined the previous year. (In 2021, they would fall again.) Back in that heady era of Covid hallucinations, next-gen D.T.C. businesses were ascendant and investors seemed promiscuous enough to roll with the momentum. Forerunner’s Kirsten Green had already achieved tremendous exits via her investments in Dollar Shave Club and Jet.com, but it was her proximity to Glossier and Weiss that made her legit crossover famous.
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Obviously, that moment proved ephemeral. In early 2022, another year of disappointing sales led to layoffs. Weiss, a visionary but an inexperienced operator, stepped down as C.E.O. in May. Kyle Leahy, formerly of Nike and American Express, swooped in, and within a year, Glossier was in every Sephora store and finally profitable (although just barely). Investors thought they were in the clear, and people closely involved with Glossier in early 2024 told me they were ready to “land this in the hands of a great buyer.” At the time, none of them imagined the brand would need yet more capital.
But now, I’m told, Glossier is out there fundraising again, and under markedly different circumstances—a significant down round that will serve as a much-needed right-sizing of the business, as well as an opportunity to bring in more consumer-focused investors better suited to navigate the nuances of the beauty industry. Multiple people with knowledge of the situation said that Glossier is aiming to raise $100 million and potentially sell significant secondary shares from existing investors, which would give a new investor substantial minority ownership.
The brand’s value will be “south of a billion dollars,” a person familiar with the fundraising deck told me, or about half of Glossier’s $1.8 billion valuation almost four years ago. “Based on the rough size of the business and rough profit, I can’t imagine anyone––unless there’s a ton of structure––paying over $1 billion for this asset,” this person added. (Glossier declined to comment.)
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Glossier is talking to all the “usual suspects” in private equity—L Catterton, General Atlantic—although it’s possible that existing investors wind up doing the deal. I’m told that the preference, however, is to bring in new money to shake up the investor base and, in turn, the board—presumably to map out an exit strategy. Last money in, first out, etcetera.
The sources I spoke with emphasized that, operationally, Glossier doesn’t need the $100 million. The impetus is “leveraging new blood around the board table,” which often results in deals with later-stage P.E. firms that write fewer, but larger checks and enjoy their controls and position in the waterfall. “They’re going to do a tender for earlier investors who want to participate so that whoever is coming in can own more and buy some secondary,” said the person familiar with Glossier’s updated deck, adding that the price “is going to be a full reset.”
This down round comes a little over a year after Glossier engaged Morgan Stanley to help explore its options. There were rumors of a budding situationship with LVMH early last year, but that was little more than a “flirtation,” according to multiple people with knowledge of the situation. The beauty M&A market, after all, is at a weird impasse. And there are more-attractive assets out there—brands like Rhode and Rare that have raised a lot less cash and are earlier in their journeys.
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Some have wondered if this is Glossier’s last stop on the road before a rushed sale. Others think this raise will only help with a future “transition.” But it just sort of… is what it is: A sub-$1 billion valuation is approximately 4x revenue, which is what most brands have been raising at for going on four years now. It’s an appropriate price—generous, even, given last year’s single-digit EBITDA, and the fact that revenues have largely been flat (net revenue was roughly $225 million in 2024, and “not much smaller than that” the previous year, I’m told). “Glossier is only raising a down round because it raised at valuations that are no longer the way that business is done today. I don’t think it’s fair to characterize it as ‘down’ as in ‘down equals bad,’” said a person with knowledge of the deal. “This is probably good for the business long term. New governance and new valuation––it’s a good thing.”
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Unrelated to fundraising, I also learned that Glossier will soon lose another of its most senior executives. C.M.O. Kleo Mack, who joined the company four years ago from L’Oréal, recently gave notice to senior leadership before announcing her departure earlier today at a town hall meeting. Mack’s exit comes about six months after Marie Suter, the brand’s creative director of nearly seven years, and her deputy, Adriana Deleo, resigned from their posts. I had heard that Glossier won’t replace at Suter’s level, but there’s
definitely an opening for a C.M.O., an incredibly important role at a company like Glossier.
The irony in all of this is that Glossier isn’t even doing badly. Its makeup and skincare have always been at the forefront of the “no makeup makeup” trend among Millennials. Glossier has also consistently had a strong fragrance business since debuting the original You in 2017. Leahy is smart, competent, and extremely well liked. Glossier is, and always was, a capital “B” brand; this company wrote the playbook on modern brand building and has never needed an influencer or celebrity to sell it.
By all counts, this is not a brand circling the drain. But it is a victim of its past—its formative years in the D.T.C.-or-bust age, when frothy valuations were ubiquitous, cash was plentiful, profitability was an afterthought, and even the smartest people in the room convinced themselves that these were tech companies rather than fractional office leasing companies or media businesses or, in this case, a beauty brand. The good news is that, unlike so many of those companies, Glossier is going to make it. The less good news: A great brand and great product doesn’t automatically make a great business.
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Ulta isn’t expanding its Target shop-in-shop concept for the foreseeable future. Earlier this year, I reported that the partnership got complicated due to a clause in the deal relating to the shop-in-shops’ proximity to existing Ulta stores. [ Puck]
A great piece about how Olaplex C.E.O. Amanda Baldwin is steering the haircare brand’s turnaround. [ BoF]
The latest Thirteen Lune drama involves Manny MUA, a.k.a. Manny Gutierrez, the founder of beauty brand Lunar Beauty, who says the retailer owes him $50,000. [ Ahead of the Kirb]
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Until tomorrow,
Lauren
P.S.: We are using affiliate links because we are a business. We may make a couple bucks off them.
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Puck fashion correspondent Lauren Sherman and a rotating cast of industry insiders take you deep behind the scenes of this multitrillion-dollar biz, from creative director switcheroos to M&A drama, D.T.C. downfalls, and magazine mishaps. Fashion People is an extension of Line Sheet, Lauren’s private email for Puck, where she tracks what’s happening beyond the press releases in fashion, beauty, and media. New episodes publish every Tuesday and Friday.
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