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Wednesday, Aug 10, 2022

Blowout Sale: $255M For Drybar Products

The buttercup yellow branding synonymous with blowout salon concept Drybar is set to emerge on the international stage this year following the sale of its products business for $255 million to Helen of Troy Ltd. (Nasdaq: HELE).

The El Paso, Texas-based consumer products firm, with a market capitalization of about $4.6 billion, said late last month it was acquiring Drybar Products LLC of Irvine, folding in the products offshoot of the Drybar business, which includes hair dryers, curling and flat irons, shampoos, conditioners, volumizers, brushes and clips.

The deal does not include the Irvine-based chain of salons, called Drybar Holdings LLC.

The purchase price consideration reflects an EBITDA multiple of less than 13x; Helen of Troy’s existing business counts a 16.4x EBITDA multiple.

The deal brings a prestige beauty brand—the 8th in the portfolio and first since its 2016 buy of water bottle line Hydro Flask—to the Helen of Troy family and expands distribution for the company to higher-end retailers, such as Sephora and Nordstrom.

Drybar, started by Alli Webb with the first salon bowing in 2010, made waves in the beauty business with its salons focused solely on blowouts and none of the more traditional services, such as cuts and colors. Today, the company’s footprint is 140 salons in the U.S.

Its five Orange County locations include salons in the Monarch Beach Resort, Pacific City and Fashion Island.

Drybar-branded styling products launched in 2013 in what’s expected to be a business totaling $64 million to $66 million in 2019 sales.

Products range from $195 high-end hairdryers and $165 curling wands to an assortment of brushes and shower caps running under $20.

Salons will continue to exclusively carry its namesake-branded products.

As part of the transaction, Helen of Troy will grant a global license to Drybar to use the trademark for the salons.

Specifics on the licensing model and royalty fees were not disclosed.

Drybar could not be reached for comment last week. The deal’s expected to close later this month.

“Powerhouse Brand”

The deal is seen as a boon for both parties, allowing each to focus on core competencies, according to Helen of Troy chief executive Julien Mininberg. That is, Drybar management can now focus on expanding the salon footprint and customer experience there with a five-year plan to double the store footprint and delve into the international arena next year.

“Drybar Holdings has focused primarily on the salons and they’ve done nothing short of a spectacular job,” Mininberg said during a call with analysts last month to discuss the deal.

“They’ve disrupted the industry. They’ve launched 140 stores. They’ve had tremendous growth, tremendous success, accumulated a base of very satisfied customers … Having them focus now 100% on their proven area and the vision that they have for the franchises and further corporate stores all around the world is a huge unshackler for them to double down in their area.”

Drybar counts some 3,000 stylists working at its salons; those employees earn commissions on Drybar Products that are sold in the salons.

Meanwhile, Helen of Troy has 51 years operating in the appliances space, Mininberg pointed out, meaning more product development is in the works for the Drybar products line.

“It’s the mother of all better together [deals] in my view,” the CEO said.

Nabbing a prestige beauty brand was attractive to Helen of Troy, especially considering the hair category of that market segment grew faster between 2017 and 2018 than skin, fragrance and makeup, according to research firm NPD Group.

“What we like is the prestige positioning and the high margins we think allows us to focus a lot of investment in innovation and really coming up with some new and interesting products,” Helen of Troy CFO Brian Grass said on the conference call.

Other beauty care and wellness products products under the company’s umbrella include Revlon Hair Tools, Pert and Bed Head.

Beauty M&A

Helen of Troy’s buy reflects another deal in the beauty space among companies with headquarters or a presence in Orange County, and an overall hot and heavy market for beauty M&A.

It follows Shiseido Americas Corp.’s $845 million October buy of Drunk Elephant, the clean beauty brand with corporate offices in Newport Beach. That was followed in November with KDC/ONE’s purchase of Irvine beauty formulation firm Benchmark Cosmetic Laboratories, which handles development of products geared towards hair, skin and nails. Terms of the Benchmark deal were not disclosed.


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