FragranceNet.com, an online retailer of perfumes, skincare and related beauty products, reached an agreement with B&S Group to sell 75% of its stake to the Luxembourg-based global distributor of consumer goods. The companies did not disclose the purchase price. The deal is expected to close in Q4 2018.
In December 2015, Internet Retailer reported FragranceNet.com was looking for a possible sale of the company and had retained Lazard Middle Market, a New York merger and acquisition firm, to evaluate possible offers. At the time, FragranceNet.com declined to discuss a possible deal. According to FragranceNet.com’s press release announcing the B&S Group deal, Lazard Middle Market acted as financial advisor to the company.
FragranceNet.com, No. 202 in the 2018 Internet Retailer Top 1000, began selling online in 1997 and offers 17,000 brand-name beauty products at discounted prices. The online-only retailer’s sales hit $212.5 million in 2017, up 6.3% from 2016, Internet Retailer estimates.
While it is one of the largest online health and beauty retailers in North America (No. 14 in the category among the Top 1000), FragranceNet.com’s growth has been slower than its peers. For instance, the health/beauty category as a whole grew web sales at a median rate of 15% in 2017, compared with the retailer’s 6.3% growth. Furthermore, FragranceNet.com’s 5.7% compound annual growth rate over the last five years is one-third the CAGR of the rest of the health/beauty category, which is 16.8%.
B&S Group says it is acquiring FragranceNet.com for its technology and for its foothold in the health/beauty category in North America.
“FragranceNet.com has a strong reputation as an online discount fragrance retailer which, combined with its customer base with a high retention rate, will significantly enhance our footprint in North America and accelerate our business going forward,” says Bert Meulman, CEO of B&S Group.
Data shows that FragranceNet.com’s shoppers do return to its site more often than other health/beauty retailers in the Top 1000. 52% of FragranceNet’s traffic is from people who have recently visited the site, according to data from digital marketing firm Connexity/Hitwise. Comparatively, the median return shopper rate for the rest of the category is 37%.
“FragranceNet.com has become a leader in the industry in the U.S. Working with a very diversified supplier base provides us the opportunity to offer a wide assortment to our continuously growing customer base,” says CEO of FragranceNet.com Jason Apfel. “B&S Group provides the opportunity of expanding our business model by utilizing the scale and sophisticated structure of the [B&S] Group.”