Rewind I: More Bricks-to-Clicks (Away & ThreadUp)

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Luggage company, Away, is the newest e-commerce retailer to open up a brick-and-mortar location (here, NYC). The company sells travel luggage with native USB ports for ease of charging on the go. Meanwhile, ThredUp is also going clicks-to-bricks starting in a random-AF location: San Marcos, Texas. Now this is interesting: because it was e-comm first, it has a lot of data about its customers (read: addresses) and is therefore pitching a tent close to where it KNOWS its customers are. Financial advisors in our space know full well that distressed company records aren't what they ought to be: often, companies don't have viable contact information for their suppliers and vendors let alone customers. Advantage: internet. 

Grocery Meet Tech. Tech Meet Grocery. (Blue Apron & Flashfood)

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This is interesting and potentially game-changing in multiple respects. An app called Flashfood is gaining traction in Canadian grocers and we dig it. The app notifies customers when food is nearing its "best before" date and going on sale. Customers can pay for the food through the app and then pick the order up the same day in-store. The idea is to eliminate waste, beef up grocer sales, and unburden landfills. Query, however, what this means for food banks. Elsewhere in grocery and "tech," Blue Apron has released its financials and, annualized over '17, they show a $208mm loss on a $240mm marketing spend (maybe they'll advertise in PETITION?). Their CAC are through the roof ($94/per) and they're showing an uptick in subscribers but a downtick in value per order and orders per customer. So, retention and volume are issues. $960mm annualized revenue, though. May be time to try it before it goes public (or fails) and the $30 VC-subsidy disappears....

Interesting Restructuring News

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  • Busted Tech. Ok, not yet. But soon. Faraday Future has cancelled its plans to build a Vallejo California assembly factory - shortly after scaling back its original Nevada facility. This Techcrunch piece says that "it's unclear where the future will lead for Faraday." Seems pretty clear to us that it will lead to bankruptcy court. And, quietly, a number of (once) high-flying startups are laying people off including, notably, Postmates and Zozi ($60mm VC - Richard Branson and others). Finally, Munchery, often hailed as a top food-delivery startup, required a recap this week to survive.
  • Grocery & Sun Capital Partners. We SWEAR we are not picking on SCP here but c'mon already: now it looks like Marsh Supermarkets is in trouble as the company falls behind on rent and quietly - well, not so quietly anymore - shuts locations. So, let's recap: in the past 6 months, SCP has seen the following portfolio companies file for bankruptcy: Garden Fresh Restaurant Intermediate Holdings LLC, Limited Stores Company LLC, Gordman Stores Inc. Maybe this will be the next?
  • High Yield. Remember a few years ago when Chobani was distressed? Now you can get in on a new offering at a premium to par, it seems. Semi-related, the bidding to lend to Westinghouse in bankruptcy was reportedly pretty intense, with Apollo Investment Corporation duking it out with Goldman Sachs, Highbridge Capital, and Silver Point Finance for the privilege to finance the nuclear power company while it figures out how to restructure its business and address two incomplete installations in Georgia in South Carolina. Yield, baby, yield. 
  • Oil&Gas. That was fast. Like super fast. Seems the new owners of Samson Resources II, LLC don't share a very "long" view of the oil and gas space - despite "having discharged approximately $4 billion of debt and nearly $300 million of annual interest expense from Samson Resources Corporation," aka the previously bankrupt entity that filed in mid-2015. And distressed investors wonder where the term "vulture" comes from. PJT Partners LP was the previous banker for the company but with the Board being what it is, there's no surprise Houlihan Lokey has a piece of the action.
  • Retail. Finish Line added itself to the long line of retailers that reported dogsh*t numbers with earnings down, same store sales down, blah blah blah. Right, and approximately 40 store closures. Naturally. Also, David's Bridal was downgraded this week. The CD&R LLC owned retailer has a $520mm term loan due in 2019 and if millennials continue to flick off conventional marriage, there's no way they'll be able to sell enough gaudy wedding dresses to manage the interest expense. And, uh oh, now there appears to be a glaring hole in the "fast fashion" narrative as H&M missed expectations with declining net profit.
  • Rewind I: 3-D Printing. Not to be a broken record about this, but it is totally real. Last week we noted Adidas' plans for it and this week Under Armour followed suit. The implications for those in the supply chain can't be underestimated.
  • Rewind II: Glass Half Full. Looks like Gordmans Stores won't be a complete liquidation after all: Stage Stores stepped up and, as part of a joint venture with Tiger Capital Group and Great American Group, will acquire roughly 50 stores with an option for a handful of others. The remainder will be liquidated but this presumably means that, for now, a couple of dozen will continue to operate. At least until the inevitable Chapter 22 that occurs after next holiday season. Kidding! (Or are we?)
  • Chart of the Week: 

Notable

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  • Professionals Fees. The staggering amounts are getting increasing attention. This kind of attention on exorbitant costs can't be good for long-term viability of the industry.
  • Short junior associates. Casetext, a San Francisco-based AI-driven legal research product for lawyers raised $12mm in Series B funding.