Briefing: December 9, 2022
Shein made headlines this week as the most searched-for brand of 2022, according to Google data, followed by Zara, Zalando, Nike, and Adidas, in the latest nod to the striking rise of the Chinese ultra-fast fashion giant. The Google numbers follow from Shein overtaking Amazon as the most-downloaded shopping app in the U.S. this summer (22.4 million Shein downloads vs. 22 million for Amazon), according to an Apptopia report. All the while, the privately-held company, reportedly topped the likes of H&M and Zara in terms of value, nabbing a valuation of $100 billion following a Series F funding round involving General Atlantic, Tiger Global Management and Sequoia Capital China this spring.
More recent reports chipped away at that valuation. Bloomberg stated this summer that investors looking to sell stakes in Shein were evaluating bids at discounts of about 30% to its $100 billion valuation, “amid concern about its slowing growth.”
In other Shein news, the Chinese giant announced this week that it will spend $15 million over the next 3-4 years to “help upgrade hundreds of factories in its supply chain.” Shein’s pledge to improve the standards of 300 of its partnered factories in the next several years comes in the wake of the release of a UK documentary alleging that Shein suppliers have engaged in rampant labor violations. It also comes as the group is reportedly preparing for a U.S. IPO “as soon as 2024,” something that would undoubtedly call for an ESG makeover for the company. (We previously reported that companies’ IPO filings are increasingly highlighting elements of ESG/sustainability, likely with the aim of garnering higher stock prices.)
Elsewhere on the labor front >>> The Dept. of Labor released a statement this week that Justar Fashion – a garment contractor that produces apparel for retailers like Stitch Fix – has failed to pay minimum wage and overtime to garment workers, and instead, paid them on “a piece-rate basis and at straight-time rates.” Additionally, the DOL stated that Justar “failed to keep records of hours worked,” thereby, violating minimum wage, overtime & record-keeping provisions of the Fair Labor Standards Act.
On the litigation front …
– A California federal judge has tossed out a closely watched class action lawsuit over EthereumMax, which accused the token-maker and a handful of famous endorsers – like Kim Kardashian and Floyd Mayweather – of engaging in a “pump-and-dump” scheme, complete with undisclosed endorsements. In an order on Dec. 6, C.D. Cal. Judge Michael Fitzgerald said that the plaintiffs failed to adequately plead their case, especially in light of the “heightened pleading standards” for fraud claims. One of striking points from the court …
Potentially not the end of the matter, the court granted the defendants’ motion to dismiss but left the door open for the plaintiffs to amend and refile their RICO, conspiracy, and unjust enrichment claims, among others.
– CAR-FRESHNER is suing Facebook-owner Meta Platforms for allegedly offering up infringing “Little Trees” air-fresheners on its marketplace site. You can find that complaint here.
– TikTok has been hit with two complaints filed by the State of Indiana. One of the complaintsaccuses TikTok of allegedly preying on young consumers, and the other complaint centers on the social media company’s use of “highly sensitive and personal [consumer] data.”
THE INDUSTRY IN BRIEF …
– Green Guides – The FTC will vote on “whether to publish a Federal Register notice commencing a regulatory review of the Guides for the Use of Environmental Marketing Claims.” More about that here.
– Stock Market – LVMH chairman Bernard Arnault briefly overtook Elon Musk as the world’s richest on Wed. before landing back in the no. 2 position, per Reuters. The switch follows from a jump in luxury stocks this week thanks to news of the easing of COVID rules in China + a “drop in the value of Musk’s Tesla stake and his $44B bet on Twitter.”
– Succession – LVMH revealed that Antoine Arnault will succeed veteran LVMH exec. Sidney Toledano as CEO of family holding company Christian Dior SE, a potential indication of Bernard Arnault’s bigger (but not-yet-declared) succession plans for LVMH?
– Succession – Prada Group announced that former Luxottica chief Andrea Guerra will become CEO effective in Jan. 2023. He will replace duo Patrizio Bertelli & Miuccia Prada, and make way for their 34-year-old son, Lorenzo Bertelli, to ultimately take the reins.
In recent deal-making news: Archive – a tech company building a resale operating system for brands ranging from Oscar de la Rena to North Face – announced a $15 million Series A round led by Lightspeed Ventures with participation from Bain Capital, Fernbrook Capital, G9 Ventures, and several minority investors. This round brings the San Francisco-based company’s total funding to more than $24M to date.
– Pixyle AI announced the close of a €1 million seed round from South Central Ventures in order to “help fashion retailers with image recognition solutions by enabling them to deliver a better online shopping experience, boost e-commerce sales & improve efficiency in catalogue management with smart product data entry.”