DTC Briefing: Win Brands Group has been looking to sell weighted blanket brand Gravity

In the meantime, Gravity has resorted to steep sales to clear inventory. On Instagram, Gravity has been advertising a “super sale” since July. Nearly all of its products are being discounted right now, offering as much as 70% off. According to one source familiar with the company’s financials, the price points these Gravity blankets are being sold at would be below break even.

Modern Retail reached out to Win Brands Group for comment but did not receive a response.

Gravity was acquired by Win Brands Group in 2021, at the same time that the holding company had announced that it secured a fresh $50 million in financing. At the time, Gravity was bringing around $22 million in revenue and was reportedly profitable.

The brand had a strong direct-to-consumer business but had not yet entered retail — which was something that a company like Win Brands Group could help with. In 2022, Win Brands Group appeared to believe so strongly in Gravity that it tucked another brand under it. That year, Win Brands Group acquired MiHigh, a maker of infrared sauna blankets. The idea at the time, according to Win Brands Group’s former president Eric Satler, was that its brands could act as “platforms” and that new brands that would be acquired, like MiHigh, would be tucked into existing platforms (in this case, Gravity).

Gravity is one of a few brands owned by Win Brands Group, in addition to Love your Melon, Qalo and Homesick Candles.

Win’s attempt to offload one of its biggest brands underscores the juggling act that many aggregators and holding companies are going through right now as they attempt to make a model work that was built for a different economic era. Holding companies like Win Brands Group, which was founded around 2017, were built in an era where both venture capital and debt were easy to come by. 

But now, as venture capital has dried up and interest rates have remained stubbornly high, businesses like Win Brands Group have found that the math doesn’t quite add up like it used to. 

There are myriad ways that aggregators might try to solve financial stress: they can execute layoffs, as Win Brands Group has already done. They may also try to sell off one of their assets, which Win has been looking at, according to sources. But it’s a challenging time to try and get a deal done right now in consumer — and at the ideal price. According to PWC, globally, the volume of consumer M&A deals declined 22% “from an already low level in the same period the prior year.” 

Zoomed out, it points to an inflection point most brands are facing this year. According to Drew Fallon, CEO of the AI financial services company Iris, who spoke with Modern Retail about the overall startup funding landscape, more brands are focused on profitability than ever before. “Channel-level profitability has become very top of mind for folks,” he said.

In Fallon’s estimation, he sees two types of maturing brands in this current climate: those that have raised money with profitability in mind and those that haven’t. “The ones that didn’t are desperate for liquidity,” he said.

In the meantime, another way to try and improve a brand’s short-term cash flow is to drastically reduce inventory levels, which would generate more cash immediately and reduce the amount of money the brand would need to spend to hold onto the inventory. It appears that Win Brands Group is trying to do that right now with Gravity. Save for a licensed Barbie Collection, Gravity hasn’t rolled out any new products this year. 

For now, Gravity’s fate is unclear, as it remains to be seen if a buyer comes in to swoop up the brand. Currently, according to one source, it brings in sales in the single-digit millions — a far cry from its sales peak when it was bought.

While more examples of companies facing distress are popping up, Fallon thinks the worst may be over soon. Announcements of sales and bankruptcies continue to roll in; much of that was crystalized a few months ago.

“In real-time, it has actually gotten a bit better,” Fallon said. 

What I’m reading

• Home gym brand Tonal has a new CEO. Petco veteran Darren MacDonald has been named the chief executive, succeeding Krystal Zell.
• PE firm 65 Equity Partners now owns a minority stake in jewelry brand Kendra Scott.
• Thrive Market is launching an advertising platform with the help of Instacart.

What we’ve covered

• Outdoors brand Backcountry used to be a leader in the space, but former employees detailed how it lost its way.
• Popcorn brand LesserEvil is launching its first national marketing campaign after bringing in $103 million in 2023.
• Brands are reporting an increase in credit card chargebacks, and that’s especially hurting subscription businesses.