Is Harry’s on its way to joining the ranks of big CPG companies?
Harry’s, after seeing its acquisition by Edgewell fall apart just before the pandemic, raised $155 million in new funding with plans to build a suite of consumer packaged goods companies.
The funding, led by Bain Capital and Macquarie Capital, valued the hip direct-to-consumer men’s grooming brand at $1.7 billion, above the offer of $1.37 billion Edgewell, the parent of Schick and Wilkinson, had made in May 2019. Edgewell walked away from Harry’s in February 2020 after the Federal Trade Commission (FTC) sued to block the acquisition, arguing it would further the duopoly between Edgewell and Procter & Gamble, the parent of Gillette.
The increased valuation comes following a year in which Harry’s momentum continued, with revenues expanding 25 percent to $370 million in 2020. A heightened focus on hygiene during the pandemic helped the company’s soap and body care businesses.
The strong valuation was a relief to earlier venture investors. A sale to a large conglomerate had been seen as an exit strategy following Dollar Shave Club’s $1 billion sale to Unilever, and concerns over that path were heightened after the FTC late last year blocked P&G’s acquisition of women’s razor startup, Billie.
With the funding, Harry’s co-CEOs Jeff Raider and Andy Katz-Mayfield have more than $200 million in cash to acquire other emerging direct-to-consumer brands. They are already discussing a potential initial public offering.
“Jeff and Andy have real-world experience and think about the business like investors who create a portfolio of brands and opportunities,” Jeff Robinson, a managing director at Bain Capital, told Forbes.
Harry’s launched as a men’s shaver subscription service in 2013, scaled into body washes and deodorants, and reached Target, Walmart and Costco. The company launched the Flamingo women’s shave product in 2018, the Cat Person cat care brand in May 2020 and the Headquarters hair care brand this past January.
Speaking to Axios, Mr. Raider said Harry’s leadership was expected to oversee Edgewell’s entire North American business. The preparation process is helping Harry’s team transition to understanding how to leverage its own distribution and production network.
“We had expanded into other standalone brands on our own and were super excited about taking over their portfolio, but when the deal didn’t go through we still thought we had come up with compelling ideas,” said Mr. Raider.
- Harry’s Raises $155 Million, Plans Acquisitions – WWD
- When Harry’s met Target and then Walmart – RetailWire
- Will Schick parent’s acquisition of Harry’s create a ‘next-generation consumer products platform’? – RetailWire
- Backed by Harry’s Labs, Cat Person launches its lineup of cat care products – TechCrunch
- Razor maker Harry’s raises $155 million in new funding for acquisitions – Axios
DISCUSSION QUESTIONS: Is Harry’s Labs better positioned to take emerging DTC brands to the next level than big conglomerates? Do you agree Harry’s is fortunate that its Edgewell acquisition fell apart?