Nest Fragrances seems to be the latest beauty business to hit the auction block.
According to a handful of industry sources, Nest has hired investment bank Moelis to run a sale process. Moelis declined to comment for this story.
Nest has its roots in home fragrance — the fastest-growing subcategory in the prestige fragrance segment, according to the NPD Group (up 19 percent year-over-year at the end of February) — and branched into fine fragrances in 2013.
“There’s this real groundswell in home fragrance,” said Nest chief executive officer Nancy McKay, comparing the category’s growth to that of masks or brows. Asked to comment on the sale process, she said, “we don’t comment on rumors.”
Nest is still primarily made up of home scents (sources estimate fine fragrances make up about 20 percent of overall sales), but the fine fragrances division is growing quickly — 90 percent year-over-year — because of its distribution through Sephora, sources indicated.
The business is drawing interest from strategic buyers and private equity firms, sources said, adding that Nest’s net sales for 2016 were about $33 million, and the business is projected to hit at least $36 million in sales for 2017, and $40 million for 2018.
Nest’s latest launch in its fine fragrance segment is Black Tulip, something founder Laura Slatkin described to WWD as a “modern chypre.” Other 2017 developments for the brand include the Liquidless Diffuser, which has scented sticks instead of reeds dipped in liquid, launching in May, and two new home fragrances — White Camellia and Tarragon & Ivy.
Sephora also sells Nest’s $16 to $64 candles, which recently launched there, as well as reed diffusers, $44; hand soap, $22; hand lotion, $24, and body cream, $55. Nest’s fine fragrances are priced at $25 for a rollerball and $72 for 1.7 oz. The company’s products are also sold through Net-a-porter, Nordstrom, Neiman Marcus and its own web site. Nest is sold in Colombia through The Blush Bar, the Philippines at Art of Scent, and in Sephora Mexico and Australia. The company is considering a U.K. launch for later this year, McKay said.
“The quality is there and the price point is attractive — that’s our positioning,” Slatkin previously told WWD.
The business hired Estée Lauder Cos. Inc. veteran McKay back in 2014 as ceo. Slatkin remains on board as executive chairman.
Nest is backed by private equity firm Tengram Capital Partners, which bought a majority stake in the business in 2012. Sources indicated the brand has roughly quadrupled sales since Tengram invested. The firm also backs hair-care business DevaCurl, as well as luxury beauty retailer Cos Bar and skin-care brand Algenist, which it bought in August. The firm sold Laura Geller to Glansaol in December.
Nest is hitting the market at a busy time for beauty M&A. Recent transactions include L’Oréal’s deal for CeraVe, AcneFree and Ambi for $1.2 billion, Unilever’s acquisition of hair-care brand Living Proof, and Lauder’s acquisition of Too Faced and Becca Cosmetics. Beauty industry sources have indicated that while deal flow has been constant for a while, there are no signs of an M&A slowdown.