A flashy agency that has scooped up a slew of bankrupt retail manufacturers together with RadioShack, Pier 1 Imports and Modell’s Sporting Items, is now in peril of submitting for chapter itself, The Publish has realized.
Miami-based Retail Ecommerce Ventures — whose CEO Tai Lopez is a self-help guru who lists Invoice Gates and Mahatma Gandhi as inspirations and costs as much as $1 million a yr for “teaching and consulting experience” — has spent $120 million to amass a portfolio of ageing retail names that additionally embody Dressbarn, Linens ‘N Issues, Stein Mart and the Franklin Mint, in line with a supply with data of the agency’s funds.
However these days, Lopez and his co-founder Alex Mehr — a former NASA scientist who helped orchestrate REV’s acquisitions after promoting his Zoosk courting web site in 2019 for $298 million — are opening the books of their privately owned licensing firm to potential buyers for a possible “sale of all their belongings, a chapter submitting or Hail Mary financing,” the supply mentioned.
“They’re burning by means of money,” mentioned one supply with direct data of the scenario.
REV’s revenues and losses final yr had been each about $60 million in contrast with about $150 million in gross sales in 2021 and about $90 million in losses, in line with the supply.
It has racked up about $200 million in debt, the supply added.
Mehr and Lopez didn’t reply to a number of emails and requires remark.
On Thursday, the Wall Road Journal reported that REV has employed legislation agency Kirkland and Ellis to discover restructuring choices.
The corporate lately mentioned it’ll pause funds on its money owed, the Journal reported, citing a lawsuit filed by a vendor this week.
A serious purple flag surfaced final month when low cost retailer Tuesday Morning filed for Chapter 11 — simply months after Mehr and Lopez paid $35 million for a controlling stake within the Dallas-based chain final September.
“The belief that an funding they made lower than a yr in the past isn’t value what they put into it might have implications for them as a result of they’ve buyers,” mentioned Adam Stein-Sapir, portfolio supervisor of Pioneer Funding Group, which focuses on distressed debt.
“It makes it tougher for REV to boost extra funding with buyers who may be considering, ‘You guys simply lit tens of millions of {dollars} on fireplace.’”
Lopez — who boasts some 8 million followers on TikTok, Instagram, YouTube, Snapchat and Fb — has written self-help books, together with his “67 Steps” on change into “rich” and “pleased” that incorporate the “teachings of highly effective and well-known folks like Invoice Gates, Charlie Munger, Peter Drucker, Gandhi, and my private mentors.”
Lopez teamed up with Mehr — an Iranian-born immigrant with a Ph.D. from the College of Maryland who labored in “danger and security administration of NASA’s house exploration missions,” in line with securities filings — on the top of the retail carnage in 2019 when almost 10,000 shops went out of enterprise.
REV snapped up the rights to the chains’ mental property, shedding the brick-and-mortar areas with a plan to run them as online-only companies.
They shelled out $20 million for Pier 1 Imports, $3.6 million for Modell’s and $6 million for Stein Mart.
“They had been a high-octane machine that grew very quick,” mentioned one model licensing govt who met with the pair early throughout their rise.
Earlier than shopping for Tuesday Morning, REV raised capital by means of a sequence of investor webinars over Zoom and emails searching for “accredited buyers” — mid-sized whales with a internet value over $1 million, excluding major residence, and revenue over $200,000 or $300,000 with a partner or companion, as outlined by the Securities and Change Fee.
Final July, Mehr despatched shoppers an electronic mail with the come-on: “Me and Tai closed an enormous deal to purchase Bodybuilding.com, a model doing greater than $100 million/yr.
“Get on Tuesday’s Investor Orientation Name Tomorrow … if you would like extra particulars on our offers that pay as much as 25% a yr in month-to-month funds.”
Two weeks later, Mehr despatched one other electronic mail: “Did you notice for each $300K invested we’ll ship you as much as $60,000 a yr?”
And on Sept. 12: “Wish to get in on REV’s personal deal stream? We already paid out over $25 million to buyers!”
In high quality print, the emails additionally say that “if you’re not an accredited investor, you aren’t allowed to take part within the name or the offers,” they usually warn “you possibly can lose some or your entire cash by collaborating in off-market offers.”
The promotional emails seem to have stopped in November.
REV’s strategies for luring buyers — particularly promising buyers sure returns — might additionally land it in authorized scorching water, mentioned David Tawil, president of ProChain Capital.
“Federal regulatory businesses, together with the SEC, are very delicate to retail buyers being offered laborious with assured returns with none substantiation,” Tawil informed The Publish.
In the meantime, a fast evaluation of REV’s assortment of retail websites alerts bother, trade sources be aware.
The now-barebones Modell’s web site appears to be like prefer it hasn’t been up to date for months.
“Soccer season is true across the nook!” reads the primary message after clicking the NFL tab, although the NFL season ended final month.
Different tabs that promise licensed caps, jerseys and sports activities regalia are utterly empty.
The few accessible choices embody a smattering of barbecue grill covers, T-shirts and wallets with random sports activities logos.
“That is loopy,” the storied retailer’s former CEO Mitch Modell fumed in an interview with The Publish. “[They] aren’t capable of get common merchandise [and] are promoting stuff from 2021. It’s all outdated.”
Modell claimed he was rebuffed by Lopez shortly after REV scooped up the previous Large Apple mainstay’s model for almost $4 million in 2019.
“I used to be making an attempt to guard my model, however there was no curiosity on his half,” Modell mentioned.
REV made headlines in December 2021 when it introduced its plan to rebrand century-old RadioShack right into a cryptocurrency trade platform.
This week, there was no point out of crypto on the location, which nonetheless promotes Cyber Monday and provides an eclectic mixture of merchandise below “new arrivals” together with guitars, ukuleles and toasters.
Final June, RadioShack drew scorn when its Twitter account started utilizing profane language and drug references — an obvious publicity stunt to attract consideration to the fizzled crypto enterprise.
Elsewhere, the Linens ‘N Issues web site options only a handful of comforters below the “bedding fundamentals” tab — together with three which have patterns.
Pier 1’s often upscale glassware and china have been changed by extra low-rent choices.
“It appears to be like to me like they’re shopping for completely from shut out retailers like TJ Maxx and Marshall’s and no matter is left after they don’t need merchandise anymore,” a distressed debt and model licensing professional who didn’t wish to be recognized informed The Publish.
“They’ve an amalgamation of outdated, mediocre or not related manufacturers promoting so many gadgets which are offered out or not fascinating,” the professional added.
“Their gross sales can’t be superb.”
