New Economic Realities   //   March 6, 2024

Win Brands Group had its third round of layoffs in 12 months

In 2022, Win Brands Group founder Kyle Widrick told Modern Retail that it had plans to continue acquiring brands and growing its portfolio. 

“This will continue for a decade-plus to come,” he said.

Those lofty ambitions appear to have hit some snags.

Win Brands Group, the owner of a consortium of brands that includes Homesick Candles and Qalo, recently went through a restructuring.

Nearly two weeks ago, Win Brands Group conducted its latest round of layoffs. The number of people affected by the layoffs could not be confirmed, but sources say the company currently has around 45 employees across its brands, down from over 100 at its peak. 

That wasn’t the only round of cuts — Win Brands Group has gone through multiple rounds of layoffs over the past year. The company also let go of people last summer, as well as at the end of 2023, according to social media and Glassdoor posts. In addition, the company’s president, Eric Satler, exited last summer, per two sources. 

Modern Retail reached out to Widrick and Satler multiple times for comment but did not receive a response.

Win Brands Group’s trajectory is indicative of the challenges the aggregator space as a whole is facing. In 2020 and 2021, aggregators were in growth mode, consistently raising fresh capital and acquiring brands.

But as funding sources like debt have become less palatable due to rising interest rates, the focus has shifted to cost-cutting. Some aggregators are undergoing sweeping layoffs. Or, in the worst-case scenario, they are filing for bankruptcy or selling themselves off. 

Last week, for example, Amazon-focused aggregator Thrasio filed for bankruptcy. Thrasio had previously been one of the most well-capitalized aggregators, raising more than $3 billion in equity and debt over the years. And on Monday, two other aggregators announced they were joining forces. Berlin-based Razor Group said it was acquiring Boston-based Perch, in a deal that would value the combined entity at $1.7 billion.

Win Brands Group was founded around 2017 as an extension of BVAccel, a Shopify web development agency. The idea was that Win Brands Group would focus on Shopify brands. Specifically, it sought out brands that had already shown proof of concept through their DTC businesses (defined as those doing around $5 million to $30 million in revenue) and were looking to sell to a larger entity to shepherd the difficult process of expanding into new channels. 

“Our focus is really growing the businesses across three primary channels: First the direct business — which most of the businesses we partner with are strong in already. Second, is Amazon. And then third is in big-box retail,” founder Widrick told Modern Retail in 2021. 

The first brand that Win Brands Group acquired was Homesick Candles, a commerce experiment that was spun out of BuzzFeed. In 2019, it acquired silicon ring maker Qalo. Then over the next three years, it acquired weighted blanket startup Gravity, beanie brand Love Your Melon and infrared sauna blanket maker MiHigh.

While the theory behind Win’s business model has remained relatively consistent, some components have evolved. For one, the company started taking on more funding. Axios reported two years ago that the company brought in $70 million in equity financing as well as a $50 million term loan from Oaktree Capital Management.

As a result, Win’s strategy became more complex, and its ambitions got bigger. In an interview with Axios in 2022, the company said it was looking to acquire brands that could be “platforms” (those with revenues north of $20 million) as well as brands that could be “bolt-ons” (those with revenues under $10 million) that could be enveloped into other brands. When Win Brands Group acquired MiHigh in 2022 for example, it tucked it under the Gravity Brand. 

The recent bankruptcies and consolidations showcase the different approaches these businesses have taken. Some aggregators focused on specific verticals, like homewares, others zeroed in on platforms like Amazon. Players like Thrasio — which once boasted more than 200 purchases — went for acquisition at scale.

“Perhaps the runway that those companies had financially — as well as the patience and willingness by investors to wait even longer — is running out,” said Juozas Kaziukėnas, founder and CEO of Marketplace Pulse, speaking about the aggregator space in general.  

These issues were certainly exacerbated by rising interest rates over the last two years. “You cannot operate with expensive debt or expensive capital,” Kaziukėnas said. “If the thing you are using to run these aggregators is expensive capital, it’s near impossible to work. You are just servicing the debt… That is the knife that is killing many of these aggregators”

What’s more, the theses behind the business models are being challenged. “The question is: what does your aggregator achieve in the first place?” said Kaziukėnas. For Amazon-focused brands, he said, it’s easier to understand how a portfolio of brands can share resources and operate more efficiently as a unit. “In the DTC space — ultimately isolated brands — there’s not a lot you can share between them.”