Alpargatas is investing $475 million to buy an initial minority stake of 49.9 percent in Rothy’s, a San Francisco-based, direct-to-consumer brand of sustainable sneakers and other casual footwear similar in some ways to Allbirds, with an option to take over full ownership within four years. The Brazilian group, known for its Havaianas rubber sandals,will buy the initial stake in two stages through an equity increase worth $200 million, followed by a tender offer for $275 million worth of additional shares later next year.
Rothy’s has a rapidly growing customer base in the U.S., and with Alpargatas’ support, it aims to increase its international reach, particularly in Asia, Europe and Brazil. The brand gets 98 percent of its sales from online channels. According to The New York Times, Rothy’s posted net revenues of about $140 million in the year to November 2021 and is “meaningfully profitable.” It has been growing at an average annual rate of 50 percent since 2017.
Alpargatas said that Rothy’s aligns with its four strategic business pillars: global, digital, innovation and sustainability. Rothy’s co-founders, Stephen Hawthornthwaite and Roth Martin, will maintain a significant unspecified equity stake in the business and continue to oversee operations. Founded in 2012, Rothy’s set out to create comfortable and sustainable footwear and claims to have transformed over 100 million single-use plastic water bottles into machine-washable shoes. In 2021, Rothy’s launched the first phase of a pilot to recycle its shoes. Next year, it plans to achieve zero waste at its Chinese factory in Dongguan and will begin using twice more recycled materials in new products.
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