Vitamin Shoppe Parent Goes Private in $2.6 Billion Deal

Franchise Group, owner of retailers like Vitamin Shoppe, is set to become a private company.

The retail holding company announced in a news release Wednesday (May 10) that it would be taken private by a group led by CEO Brian Kahn in a deal worth $2.6 billion.

“We are excited to have this opportunity to continue our business strategy of partnering with high quality franchisees, operators and financial institutions, while also delivering certain value to our public stockholders despite a challenging business environment,” Khan said.

That environment is one in which a number of retailers have struggled recently. Retail layoffs last month led all other industries, jumping 270% from March, according to a report last week by employment service Challenger, Gray & Christmas (CGC).

“Retailers and consumer goods manufacturers are preparing for a tightening in consumer spending, particularly with the Fed’s hike to interest rates in an attempt to control inflation,” CGC Senior Vice President Andrew Challenger said in the report.

And even though this week’s government data has shown inflation cooling, consumers continue to cut back in the face of what they see as a long season of high prices.

Though inflation has slowed somewhat since hitting its apex last July, 70% of grocery shoppers and 67% of retail customers said they see “significant price increases in the next 12 months,” and most don’t see the price outlook getting meaningfully better until late into 2024, according to PYMNTS research.

As reported here Tuesday (May 9), PYMNTS research also found that consumers were 21% more likely to cut back on spending on retail products than they were while at the supermarket. Six out of 10 consumers report opting for cheaper retailers, while 35% have decided to forgo product quality in favor of lower-quality, albeit less-costly, goods.

Franchise, meanwhile, reported an almost 3% decline in first-quarter revenues on Wednesday as consumers held back on non-essential spending.

Headquartered in Ohio, Franchise Group’s other brands include Pet Supplies Plus, American Freight and Sylvan Learning.

The company last year was one of two bidders for Kohl’s in what PYMNTS described as an “ambitious” offer, given the disparity in sizes of the companies (at the time, Franchise Group was one-fifth the size of Kohl’s).

However, talks between Kohl’s and its suitors fell apart amid what the department store called a retail environment that had “significantly deteriorated.”

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