Tariffs hit Mattel, M&A news from Skechers and DoorDash and a look at Mother's Day flower delivery with Bouqs

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0:40Hello, everyone. Welcome to the Modern Retail Podcast, a show about all the ways the retail industry is changing and modernizing. I am senior reporter Gabby Barco. I'm here with fellow senior reporter Melissa Daniels. How are you this week, Melissa? I'm doing great, Gabby. Spring is in full swing here in the desert, and I'm trying to spend a lot of time outside, but I keep getting sucked into my phone to read updates about the new Pope. Same, same here. Yes, Pope and tariffs are the leading items in my brain right now. But yeah, speaking of before we get into our rundown portion, where of course, we'll have some tariff updates, we are going to have a an interview later on in the show by Melissa, who's going to be talking to John Tabas.

1:31He's the co-founder of Books, which is a flower delivery service. And they're going to talk about all the ways tariffs are impacting the floral industry, especially this time of year. This is a really big period for the industry, given that it's Mother's Day. They basically consider that their Super Bowl. So before we get into all of that, I let's get into the top stories of the week that we're going to be talking about. First up is going to be toys. We had Mattel earnings this week, and they talked about tariffs pretty extensively. So we're going to just look at the category as a whole and how it's going to shake out, or at least the way we think so.

2:16And then that is going to be followed by Skechers News. The company was taken private this week in a really big deal,$9.42 billion deal. So we'll talk about that. And then we will wrap up by discussing DoorDash and its latest acquisitions. It made two really big ones this week. And yeah, we'll talk about all the ways that DoorDash is living out its ambitions. but first up let's talk toys. Melissa before we get into Mattel's earnings what are your thoughts just like at the idea of toys getting more expensive as a mom I feel like maybe you have some strong thoughts. Yeah I think this is a great question and I think we're already seeing people really start to consider how they're metering out their spending.

3:09Toys is one of those things that you kind of always want to buy your kid but you also don't want to spend too much money on stuff that's all over your house. You know, there are sort of capacity constraints with toys. I think we might start to see a lot more secondhand and buy nothing and informal economy, you know, sort of toy activity. It's one of those areas where people, I think, are really willing to move on from stuff. You know, your kid outgrows something and doesn't want to play with it any longer and you feel okay about moving on from that. So if I were Mattel, you know, I would be thinking a little bit about resale right now and if there's anything there.

3:45you know, for some of their great brands. And, you know, I think we're going to start to see more from the off price and the secondhand marketplaces maybe in the toy category, too. Yeah, that's an interesting point, especially when I think about kids that I feel like more than ever quickly outgrowing and, you know, hitting those milestones where all of a sudden, certain toys not cool anymore, and they're moving on. And now there's video games that they're tapping into very early on. But, you know, to take a step back, really, what we're referring to is the way tariffs are going to be impacting this category, mainly because China is a huge manufacturing hub for toys by American companies.

4:28So they rely on it pretty heavily, about 80 % of the toys come from China that are sold in the US. And right now, of course, as they're, a lot of these companies are planning their 2025 holiday season. So they're having to kind of figure out or address inventory concerns and whether they are going to have to raise prices. So yeah, with that, what are your thoughts on these Mattel earnings? Because it is kind of a bellwether for the category. Yeah, I would agree on that. And I think, you know, their sort of frankness in addressing how tariffs are affecting them shows you, you know, where their heads are at right now.

5:07One thing that I thought was interesting was that they really are going to focus on diversifying their supply chain. The company says that it's accelerating its plans to further reduce its reliance on China. They're relocating 500 SKUs from China this year, up from 280 last year. And they're planning that their U.S. imports from China will be less than 15 % by next year. So I think this is an example of sort of that sort of like forecasting and pivoting that a lot of companies are doing because of tariffs. You know, they're outlining some really great plans at Mattel and what they're doing to address this.

5:41And eventually that, you know, will hopefully offset any cost increases that they have to make. You know, when we talk about toys getting more expensive, are there any ways that the companies can mitigate that? Yeah, I mean, with that, we can maybe mention what their CEO said on the earnings call this week, which is basically, yeah, they're taking this three prong approach, which is diversification, further reducing the reliance on China, like you said, and then also taking pricing action in the US business where necessary. So, you know, with that, I think, best case scenario, they are expecting that 40 to 50 % of their products will be priced under$20 or less.

6:23That seems, I don't know, to me, seems pretty good, right? Considering, you know, you've got Barbie and Hot Wheels, two of the biggest brands under the Mattel umbrella. But yeah, it seems like they have a plan in action. But again, no one is actually saying, you know, no one's giving like concrete price increase plans, right? Like they're just kind of like, this is what we're doing to avoid it. Yeah, I think heading into Q2, we'll also see Mattel really lean into some of its product offerings to sort of offset any price conscious consumers and really woo people in with new products. They've got some Jurassic World product coming out.

7:01They've got some Minecraft product coming out, and that's really hot. And they also have a lot of momentum around Hot Wheels right now, thanks in part to a Netflix show that recently started. Yeah. And then I guess with that, we can talk about how the Trump administration has addressed this. I thought this was interesting because it feels kind of different from the way he's addressed other industries or other categories that are impacted by China tariffs. But he did tell the press on multiple occasions that, well, kids will just have to do with less stuff. There was one instance of White House reporters saying that he said, quote, well, maybe the children will have$2 instead of$30.

7:45And maybe the two dolls would cost a couple of bucks more than they would normally. Again, we don't know if that math is going to check out, but it just goes to show that, you know, this less is more approach is an interesting way, I guess, to spin the potential price increases on people buying toys. But I would just say that, like, I don't think the toy brands are going to be happy about that outcome, I don't think telling them like, you'll just sell less is going to cut it. That's just me personally speaking. Yeah, I'd agree with you there. I mean, and everything we're hearing from companies like Mattel shows that they're just pivoting and trying to figure out how they are going to succeed in an uncertain time.

8:28Yeah. Okay, well, from there, we can move on to Skechers, which is, I guess, in a little bit of a better position right now. But it was acquired at a really high price this week. And that means it is going private. It has been publicly traded up until now. And yeah, this$9.42 billion buyout by the investment firm 3G Capital, it's apparently the biggest buyout in footwear history. So yeah, thoughts? That's new to me. I didn't realize it was the biggest buyout in footwear history, but it doesn't surprise me. You know, I think Skechers has been really ubiquitous in a lot of shopping areas for years.

9:14I think it's a product that has appeal across categories and demographics. And they've done a really good job diversifying their product over the years, too, as far as having more technical product or more casual product, more sort of orthopedic and supportive style product. So I think this is interesting. Tell me what you're looking at out of this news. Yeah, I mean, you know, we can get into the what Skechers did right in a second, but they actually had reported their earnings about a month ago, and some people made note of the company basically withdrawing their financial outlook for the year during that call, inciting macroeconomic uncertainty stemming from global trade policies.

10:01I think, you know, we just assumed that's tariffs related. But, you know, a few weeks later, this news came. So I imagine this was in the works. But interesting. Yeah, I mean, I think that just goes to show that obviously, the performance has been really strong that it caught the eye of 3G, for example, but it's been doing really well. And it's a little jarring because it's like literally performing better than somebody like Nike, right? Which I don't think a lot of us probably expected a few years ago. Because footwear in general is actually struggling just, you know, like apparel where people are just cutting back on the quantity.

10:42So the fact that Skechers has just been able to carry that momentum in the last few years, is pretty telling. I mean, it basically keeps setting records for itself every quarter. In Q1, it reported$2.41 billion in sales, and that's 7 % increase over last year's earnings. So yeah, I mean, there's a few different factors to why that is, and people are crediting it with just kind of having a really strong strategy. Yeah, I think those are great observations. One thing that is interesting to me about this news is that, you know, there is a lot of competition in the footwear category right now from from startups and some smaller brands.

11:24Right. There's always sort of new and innovative brands and footwear companies coming along. But at the same time, these sort of big guns like Skechers and Nike continue to dominate. another thing that I think Skechers has probably done well is its international presence you know this is a brand that has gone beyond the U.S. in thinking about its demographic and I imagine that for the folks looking at the numbers in the balance sheets that they're seeing growth there and seeing a future there as well yeah and then another factor is the fact that it is really focused I think you were alluding to this earlier but their big value prop is that there's comfort and value, right?

12:04Like you are getting a pretty decent product out of just for your money there. And then it's also been able to kind of dovetail that by adapting to trends, like, obviously, chunky dad shoe styles just continued to dominate in the last few years. And of course, Skechers is kind of a classic example of that. So I think all of those factors have been able to carry it through when a lot of other brands have been struggling. Well, I'm curious if there's any other M &A deals you've been watching this week, Gabby. What else have you been looking at? Yeah. So speaking of M &A, as I mentioned, we're going to be ending this segment with DoorDash.

12:46This is a pretty big one. So basically this week, the company announced two back-to-back acquisitions. The first one was Seven Rooms, which is a kind of like a reservation platform. And the other one is Deliveroo. Those unfamiliar, that's a really big delivery platform in the UK. It's sort of I guess I think of it as like their version of DoorDash, ironically. So the fact that this this consolidation is happening really quickly is very telling after a few years of sort of ups and downs since the pandemic. Yeah, this was interesting because I think it's rare we see a company make, you know, two multibillion dollar deals in one week.

13:29The seven rooms acquisition was for one point two billion. The Deliveroo price is reportedly$3.86 billion. So DoorDash has a lot going on right now. I would be very curious to be a fly on the wall in one of their meetings. Yeah. Yeah. So just for context, Seven Rooms is what I consider a very high-end, New York-based restaurant reservation platform. That is a mouthful as I'm saying it. But I've used it personally to reserve, yeah, to sort of like these higher end. Like it's like if you're not on OpenTable and on Resi and you're on seven rooms, it's like a little bit of a nod to maybe the tier of, you know, dining you're in.

14:14Not necessarily, but that's just kind of the connotation it has. But yeah, it was founded in 2011. It's been around for a while and it has more than 13 ,000 venues. And just speaking to restaurant operators, they seem to really like it. I think just seems to have like really good customer service and very hospitality driven. Yeah, I was going through the list of some of the venues and organizations they work with, and it's a lot of really great companies. And so I'm wondering what that integration might look like with the rest of DoorDash's catalog. Like, I'm wondering if I can DoorDash Nobu from the restaurant in Indian Wells.

14:51Maybe that would eliminate the experience of why I would want to eat there in the first place. But, you know, like, I'm just sort of curious what the future is going to look like. And if that's some of the planning here, you know, if the seven rooms inventory is going to lay on top of the DoorDash technology in some way. Yeah, it's interesting, because I guess it got me thinking into the sort of the dine-in experience. And I've noticed in the last couple of years that Uber Eats has been doing this as well, where when you're ordering, it actually does give you the option of dining in. So the fact that they're trying to integrate that reservation experience into what we usually think of as like a delivery platform is really interesting because seven rooms is also really big with like lounges and clubs and bars and things like that.

15:36So interesting move there. It's a little different than Deliveroo, right, which is sort of a more straightforward food takeout takeaway, I should say, for the UK crew. Maybe we could talk about Deliveroo actually right now. It's just kind of had a tumultuous few years. Yeah, this company hadn't really been on my radar, but reading about it this week, I think it's going to be really interesting to see how it plays out. I guess Deliveroo went public in 2021 with a 7.6 billion pound IPO. Some banks and analysts called that, quote unquote, the worst IPO in London's history, according to some reporting elsewhere.

16:15It's also worth noting that Amazon took a 16 % stake in Deliveroo during COVID at 575 million. And obviously that hasn't really panned out well. But DoorDash is really going to be tasked with, you know, maybe rebuilding this operation and figuring out how to grow it. Yeah, you know, it kind of went public during that wave of a lot of companies IPOing. I think for those who recall, it was like a really big rush to going public. And then of course, you know, not being able to live up to that. I mean, basically just has not been able to turn a profit since then. So all those billions of dollars in investments are just kind of sitting there.

16:55So yeah, I guess it's interesting because clearly DoorDash thinks that it's worth trying to grow it and maybe operate it profitably. We will see how. Yeah, yeah. I think that's a good segue into just sort of looking at what these acquisitions mean for DoorDash as a company, right? It's almost like it wants to be a flagship CRM for the hospitality industry, you know, trying to get all the different ways that you as a customer might interact with your restaurant or your venue, whether that's delivery, whether that's a reservation, whether that's a dine-in. You know, I think you can learn a lot about a company from how it describes itself.

17:31So, you know, I looked at DoorDash's bio and they don't call themselves a delivery service the way you or I might think of it. They call themselves a local commerce platform. So to me, that leaves, Yeah, to me, that leaves a lot of room for them to do other services down the line. Yeah. And I think if we zoom out a little bit more, consolidation has just been a really big theme in this space, which I guess makes sense just given all of the challenges and just how expensive it is to do delivery profitably, I guess, in a post-pandemic world. I mean, of course, a lot of us, a lot of people did sort of get used to using these platforms that maybe didn't otherwise, but keeping them on there as opposed to, you know, cooking at home.

18:19I think we're seeing some reports of people doing more of that now, given stretched wallets. And then, you know, the fact that there are like fees, right, that are tacked on. I mean, it is still seen a little bit as a luxury. So what they've been doing, I think DoorDash, Uber Eats, all of them, Instacart, which we'll talk about in a second, is they've been diversifying away from just hot restaurant food, which is actually like the most expensive item to deliver by, you know, just like now you could get like Sephora on Instacart. You can get Target. You can get all of like the actual retail shopping or essentials on there.

18:57So, yeah, I don't know. What are your thoughts on that? I mean, it's obviously a different model, but if you're building a back end, I guess it can support all of it. Yeah, I think that's a good point. And I think with with a company like Instacart, we're also just seeing them play in so many other areas of of commerce and in retail. You know, they've gone really big on retail media. And I've talked to a lot of brands who've used Instacart's retail media, even other retailers like Hy-Vee. I believe that's the grocer chain and located in the Midwest. they're using Instacart's retail media network, right?

19:31And so we're sort of seeing this idea that the company isn't just facing consumers, but trying to be a service provider for its partners and its clients in the retail industry. You know, for DoorDash's perspective, I think they're in a relatively strong position. You know, its earnings this week showed that its total orders increased 18 % year over year to$732 million. That's not nothing, especially in this environment, like you said, where people are paring back. Their revenue has increased 21 % year over year to$3 billion. And I think we're going to see more things to come from them with these announcements.

20:08Okay. So when we come back, we are going to be hearing from Melissa, who interviews John Tabas, the co-founder of Books. Melissa, can you give us a little bit of a preview of what you guys spoke about? Yeah, I'm really excited for folks to hear this conversation. John founded the Books company over 12 years ago, and he's currently the head of venture building at M13, where he's a partner. But we really focused on books and going behind the scenes of how a company in the floral industry handles Mother's Day, which, as you referenced earlier, is their Super Bowl. It's the biggest time of year, and it's, you know, as much as 20 percent of annual revenue for some florists.

20:48With books, we talked about how their supply chain is able to meet this crush of demand. And obviously this year we talked about tariffs because a lot of their flowers are coming from overseas. Yeah, that sounds great. Yeah, I'm really looking forward to it. I think that is something that a lot of people, you're right, don't know about. The fact that a lot of flowers do travel here by sea before they're made into beautiful bouquets. So we are looking forward to that. So come back after the break to listen.

21:28Let's face it, in today's retail landscape, timing is everything. Shoppers today are driven by value and visuals. According to recent data, 83 % of U.S. shoppers say price is their top consideration, and 77 % look at product ratings and reviews. 59 % are influenced by real customer images, and over half expect fast shipping and flexible return policies. That puts pressure on apparel brands to stay in stock, invest in paid media, and create high-quality content all at once. That's where ClearCo comes in. ClearCo provides fast, flexible funding built for e-commerce so you can act on growth moments without giving up equity or signing personal guarantees.

22:12You only pay when the capital is used. ClearCo has deployed over$2.5 billion into over 10 ,000 e-commerce brands in apparel, beauty, health, and beyond. Ready to fund what's next? Learn more at clear.co. That's C-L-E-A-R dot C-O. All right, John, thank you so much for joining the Modern Retail Podcast. Introduce yourself to our listeners who aren't familiar with your background or books. Sure thing. Thanks so much for having me. My name is John Tabas. I'm a co-founder of and chairman of the board of the Boox Company, which is a modern online floral retailer. And we also have five stores across the country.

22:56Very cool. Well, when you started Boox, this was over a decade ago. Fast forward to today, you've delivered more than 10 million orders. Mother's Day is obviously a big time of year for companies in this space. What was your first Mother's Day like at Boox? It's a wonderful question. I'm super nostalgic about it. We started the business with myself and my co-founder, Juan Pablo Montufor Arroyo. He was down in Ecuador on a rose farm. And I was up here and it was literally like me and my dog on a couch. And we were just sort of trying to figure this thing out. We had four or five folks on the team, all part-time, no one being paid.

23:34And we were just trying to see if this idea of shipping flowers from a volcano in Ecuador could actually work. and our first Valentine's Day. So we'll get to Mother's Day in a second. I remember we probably shipped, you know, let's say 100 orders. It was not a large number. But I remember my co-founder afterwards just being like, we can never ship more than 100 orders in a day. It'll never work because it was so stressful. Because everything was so manual. We hadn't figured out how the process worked. And it just seemed like this insurmountable volume of orders. and you know you do what you do you build the company and over time your capabilities come very different now obviously we ship a heck of a lot more than 100 orders in every day but it reminds me a lot of sort of what the company was like it was five six people all remote all communicating via text message and email and skype because there was no zoom wow um just really a different a different era almost and especially internet businesses um but those days were you Valentine's Day and Mother's Day were just almost pure chaos because things just didn't work right.

24:44We hadn't figured out the technology, the process, the product. And so you get 100 or 200 orders. And the very first day we shipped, so going back to November 6, 2012, I had set that as the date. We were shipping that date. No matter what, come hell or high water, orders are going out. Our boxes didn't arrive. And so my co-founder and his mom and his sister drove to the farm and they made boxes by hand. Wow. It was a total shipment of six orders. But that sort of to me is the epitome of what startup is, is you just figure it out. And it's not going to be perfect, but you do everything you can to keep the business evolving and keep it moving.

25:27And that's probably the best memory I have of those Valentine's Days and Mother's Days was it was chaos. us, but we learned every time how to do it better, how to do it better. And now we're literally shipping millions of orders a year, you know, through a platform that started with that, you know, first day of six. That's incredible. It's really an amazing growth journey and so much along the way that has changed technologically, right? That has sort of just been able to help, you know, help you jump light years ahead. So bring me behind the scenes, just typically, you know, What is sort of the supply chain map of books?

26:01Where are your flowers coming and how are they getting where they're going typically? Yeah, so we have a network of amazing farmers around the world. We have farms in Ecuador, Colombia, Chile, Peru, the U.S., Canada, every once in a while, Africa, every once in a while, Japan. And the general sort of call it common attributes across those farms is that they're relatively forward thinking farmers. They want to try new things and be more experimental and entrepreneurial. They grow sustainable blooms. That means they're certified by a third party to be sustainably grown. Rainforest Alliance certifications, et cetera, et cetera, says they're not going to cut down the rainforest.

26:41They're not going to dump red label chemicals into the earth. They're going to use natural predators to contain bugs, et cetera, et cetera. And that's a key value prop of the way that we operate is that because we know exactly where it comes from, you're going to have a good feeling about the way that the product is sourced and how it was grown. And so we have this network of farms around all these different areas. And we're built technology that creates communication between those farms and our website to then let a consumer order directly from that farm or from one of our distribution nodes that we have here in the States.

27:14And that effectively sends the order directly to the farm. The farm receives it. It's going to get in-language instructions on how to build that bouquet. Packaging is already on site. They're going to package that up and they're going to take it to the local airport. We have an import partner who takes it into Miami, has to go through customs. And then from there, through FedEx to the home. And so it's basically the farmer and us between the customer and the flower. In this sort of traditional supply chain, you would have four or five, six entities sort of in that value chain. But one of the key things that we believe is that by having fewer players, we can get a fresher bloom, a more transparently sourced bloom to the customer, and therefore they get more value for the same dollar paid.