Digitally native upstarts offer growth potential, a wealth of consumer data and an avenue to strengthen relationships with retailers online and in stores.

Edgewell Personal Care Co.’s $1.37 billion acquisition Harry’s Inc. shows that established consumer packaged goods (CPG) companies are serious about winning online customers and fending off the threat from fast-growing digitally native brands.

“Regardless of the value they paid, it’s yet another signal that larger CPG companies are willing to acquire challengers,” says Keith Bendes, vice president of brand partnerships at Float Hybrid, a marketing agency that creates interactive online and offline experiences for consumers.

Such brands are attractive because they offer the potential for growth and a wealth of consumer data derived from being a digital native and selling directly to consumers, Bendes says. And, once acquired, startup brands that show success can be well-positioned to capitalize on the infrastructure and scale of the larger CPG companies, says Bendes, who formerly worked for CPG giant Unilever NV. Whether the acquiring companies can foster those brands well enough to “move the needle” in terms of sales and market share has yet to be seen, he says.

The billion-dollar-plus valuation of Harry’s also “sends a positive signal to investors in challenger brands” such as Harry’s and encourages more investments in the sector, Bendes says.


Bonnie Herzog, senior analyst at Wells Fargo Securities LLC, is upbeat about the deal. “While it may come across as somewhat desperate and [Edgewell] may have overpaid for growth, we think EPC will ultimately be in a better place to turn around its wet shave business and should be given credit for taking aggressive action,” she wrote in a note to investors released Thursday.

Buying back retail shelf space

The value of Harry’s goes beyond the brand’s digital expertise and online market share, says Chris Perry, vice president of global executive education at Edge by Ascential, an ecommerce market data firm. While it launched as a web-only brand in 2013, Harry’s has since formed a partnership with Target Corp. (No. 16 in the just-released Internet Retailer 2019 Top 1000), Perry says. That relationship provides another level of opportunity for Edgewell.

“Some of these large CPG brands are playing defense,” Perry says. As retail chains close locations and redesign existing locations to create a better shopping experience, retailers will likely favor brands like Harry’s that connect with consumers in new ways. Legacy CPGs that acquire those new brands are, in a sense, “buying back” shelf space, he says.


Harry’s is the nation’s second-largest online shaving brand, according to Internet Retailer data. When combined with Edgewell’s Schick brand, the combined company will have a 20% online market share based on 2018 sales, according to data from market research firm Rakuten Intelligence.

“While Harry’s is a digitally native brand, this strategic acquisition provides Edgewell with the potential for accelerated growth globally,” Perry says. “This partnership model with Target is a powerful growth strategy that could be replicated in other markets, like the U.K., with leading retailers.”

Target began selling Harry’s products in 2016 and earlier this year added Flamingo products, a Harry’s-owned brand of women’s razors and grooming products. Retail behemoth Walmart Inc. (No. 3) began selling Harry’s products in 2018, giving the brand an even more significant in-store presence.

Edgewell’s purchase of Harry’s—along with other recent acquisitions, such as Unilever’s 2016 acquisition of Dollar Shave Club—validates the idea that small, digitally native brands actually can disrupt otherwise sleepy segments of the CPG market, Perry says.


“This is the real deal. Digital upstart brands are finding gaps in the market,” Perry says. That has allowed them to create fun, exclusive products they can market at relatively low prices. The stories behind the brands enable them to connect with consumers in ways the established players would find hard to replicate without building entirely new lines of products. That makes the upstarts a threat both online and in the battle for shelf space in stores, he says.

The acquisition of Harry’s “provides yet another proof point that the consumer goods economy has fundamentally changed,” says Ken Cassar, principal analyst Rakuten Intelligence. “Innovation—in business models, if not in product—comes from outside the big brands. But the big brands are smart enough to know that embracing this new innovation model is essential to long term survival, albeit at a high cost.”

For Harry’s, the merger offers a chance to benefit from Edgewell’s relationships with brick and mortar retailers as Harry’s seeks to get its products on more store shelves, Cassar says. Harry’s also has what it takes to continue succeeding online, he says.

“While trailing Dollar Shave Club’s [online market] share significantly, Harry’s has built a strong economic model, with average order sizes 121% higher than Dollar Shave Club’s, driving spend per buyer that is almost identical to Dollar Shave Club’s,” Cassar says. The higher order sizes allow Harry’s to generate more profit from each delivery, a critical factor that drives profitability in any direct-to-consumer business, he says.


‘Next-generation brands’

While each deal involved a larger CPG manufacturer buying an upstart shaving brand for more than $1 billion, Edgewell CEO Rod Little on Thursday downplayed the comparison to Unilever’s Dollar Shave Club deal. Edgewell is no Unilever, and Harry’s omnichannel model differs significantly from Dollar Shave Club’s, he says. Dollar Shave Club operated using a subscription model and had no retail store presence.

In a second-quarter conference call with analysts to discuss the merger and second-quarter earnings, Little pointed out that Edgewell is “not the big entrenched CPG player like some others in the category that we compete against.” In an interview with the CNBC cable network the same day, Little underscored that point, pointing out again that Edgewell is a midsized player. Also, “Harry’s is not an average startup, it’s totally integrated and omnichannel,” Little said.

The companies intend to combine capabilities “to build next-generation brands,” Edgewell says in a statement. “This approach includes offering differentiated products driven by real consumer pain points, building modern and relatable brands and establishing deep consumer connections through fully integrated omnichannel experiences.”

Little was named CEO in February after joining Edgewell in March 2018 as chief financial officer. Previously, he served as chief financial officer with HSN Inc. (part of Qurate Retail Group, No. 9 in the Internet Retailer Top 1000) and before that as chief financial officer of cosmetics, skincare and fragrance company Elizabeth Arden.


Edgewell, created in 2015 as a spin-off from battery maker Energizer Holdings Inc., is not new to ecommerce:

  • In 2018, Edgewell completed the acquisition of Jack Black L.L.C., a luxury men’s skincare products company. Terms were not disclosed.
  • In 2017, Edgewell launched a direct-to-consumer site in the U.S. for its Schick Hydro Connect razor at Since then, it has launched and has redirected the Hydro link to this site as well. Edgewell also sells products via Inc. (No. 1).
  • In late 2016, Edgewell purchased Bulldog Skincare Holdings Ltd., a U.K.-based men’s grooming and skincare products company. Bulldog, which sells products in stores and online at, is available in more than 20 countries, including the United States.

Harry’s generated $269.1 million in 2018 online sales, which is a 38% increase over 2017 web sales of $195.0 million, according to Internet Retailer estimates. Its five-year compound annual growth rate in online sales is a whopping 195.2%, well above the Top 1000 five-year median CAGR of 18.5%, according to Harry’s is No. 197 in the Internet Retailer 2019 Top 1000 and has raised $375.2 million in venture capital, according to Crunchbase.

Edgewell already owns several well-established personal care brands, including Playtex, o.b., Banana Boat and Hawaiian Tropic, as well as shaving brands Schick, Skintimate, Wilkinson Sword, Edge and Personna.

Edgewell says it will finance the acquisition of Harry’s through a combination of cash, net new debt and stock. Under the terms of the deal, about 79.0% of the total value of the transaction will be paid in cash and 21.0% will be paid in Edgewell common stock. Upon completion of the deal, Harry’s shareholders will own about 11.0% of Edgewell.


Edgewell reported net sales were $546.7 million in the second quarter of fiscal 2019, a decrease of 10.1% compared with the prior-year quarter. Sales for the six months ended March 31 were $1.004 billion, down 6.7% from $1.076 billion for the same period in 2018. Net earnings for the quarter were $48.2 million, down 26.0% compared with $65.1 million in the second quarter of fiscal 2018. For the six months, net income was $47.8 million down  33.4% from $71.8 million in 2018.

In announcing its second-quarter results, Edgewell said it is continuing its “previously announced exploration of strategic alternatives” for its feminine care and infant care businesses, including the potential sale of one or both.