Dive Brief:
- Brazilian footwear company Alpargatas will acquire a 49.9% stake in DTC company Rothy’s, according to a Monday press release by both companies.
- A $200 million Alpargatas investment in primary capital will be followed by an acquisition of around $275 million of Rothy’s shares from current stockholders. The agreement also allows Alpargatas the option to obtain additional Rothy’s shares between the first and fourth anniversary of the transaction.
- The deal will result in a post-investment valuation of $1 billion for Rothy’s. Upon completion of the transaction, Rothy’s co-founders Stephen Hawthornthwaite and Roth Martin will maintain “a significant equity stake” in Rothy’s and will continue to oversee operations.
Dive Insight:
The DTC company that is known for its recycled plastic shoes is about to accelerate its global expansion.
Rothy’s will use the investment from Alpargatas, known for its Havaianas flip-flop brand, to fuel international growth and advance operations. The company is looking to increase its presence particularly in Asia, Europe and Brazil.
“This partnership with Alpargatas marks the beginning of our next chapter of growth, and reaffirms the strength of our business model and momentum in the marketplace,” Hawthornthwaite said in a statement. “With Alpargatas’ financial support, scale and expertise, we look forward to rapidly expanding in global markets, building our physical retail presence, advancing product development and accelerating our goal to reach circular production by 2023.”
Broadening their presence via physical stores is a route other digitally-native companies have followed as customer acquisition costs have gone up. It’s also a way to market and improve brand recognition. Rothy’s receives 98% of sales from digital channels, but currently has brick-and-mortar stores in San Francisco, Boston, Washington, D.C., New York City, Los Angeles and Chicago.
Alpargatas sees the deal as a way to advance its operations and boost its relevance in the North American market, according to company CEO, Roberto Funari. “We are eager to work with Stephen, Roth and the entire Rothy’s team to expand the brand’s community all over the world through new retail and e-commerce channels,” Funari said in a statement.
Rothy’s made a number of strategic announcements in 2021. The company expanded into the men’s category this spring with the addition of a sneaker and a loafer, which was described as the “most requested category to date.” The retailer also announced its goal to reach circular production by 2023.
