Shaving startup Harry’s tries to soothe worries about razor deal

The $1.4 billion acquisition of shaving startup Harry’s by Schick owner Edgewell Personal Care may be on a razor’s edge, The Post has learned.

Lawyers with the Federal Trade Commission continue to raise concerns about the tie-up despite months of review — raising questions about whether the deal will close by March as planned, sources told The Post.

“Harry’s is worried,” a source with knowledge of the talks told The Post. Despite the FTC kicking off its probe last year, agency officials continue to “ask hard questions” about Harry’s and Edgewell’s assertions that the deal won’t lead to higher prices, this person said.

“The razor aisle has always been pricey and Harry’s promise was to be a low-cost provider,” this person explained. “Harry’s had decried the high prices and are now being acquired by the entities that they decried.”

Indeed, the market for razors has been dramatically shaken up in recent years precisely because of companies like Harry’s, which cuts costs by selling razors directly to consumers over the Internet.

In July, Procter & Gamble took an $8 billion writedown on Gillette, the nation’s leading seller of razors, due in part to “new competitors” that have been offering razors “at prices below the category average,” P&G’s CFO Jon Moeller said at the time.

Currently, Harry’s sells eight blades for $16, compared with five Schick blades for $14 or four Gillette blades for $25, according to the companies’ Web sites. Harry’s boasts on its Web site that it charges $2 per blade — or $1.70 less than Gillette.

According to Harry’s Web site, founders Jeff Raider and Andy Katz-Mayfield started Harry’s in 2012 “because, like lots of guys out there, they were frustrated with steep prices that seemed to go up every time the leading brand decided to release a new, overdesigned razor. Harry’s fixes that, with fair prices, no upcharges, and no gimmicks.”

On Jan. 16 — the same day The Post reached out to Harry’s about this story — Raider wrote a lengthy blog post on Medium touting the Edgewell merger as beneficial for consumers’ wallets.

“Edgewell’s intellectual property, lower manufacturing costs and better distribution capabilities” will help keep prices the same “or even lower,” he proclaimed.

“The technology upgrades we intend to make with Edgewell will be a game- changer for our customers. We will also reshape the Schick brand to emphasize the nearly 100 years of craftsmanship that goes into each Schick blade, and, like with Harry’s, we will offer Schick products to consumers at fair prices,” he said.

But the FTC’s tough questioning comes as the very low-cost suppliers that have helped bring prices down are getting gobbled up.

Harry’s main rival, Dollar Shave Club, was snapped up by Unilever, the seller of Dove and Vaseline, in 2016 for $1 billion. Now Dollar Shave Club appears to be more expensive than in its pre-acquisition days.

In 2016, its most expensive offering was a $9 a month shipment of four razors with six blades. Today, it’s marketing a $39.60 offer that ships every two months and includes eight razors with several lotions and scrubs. And Dollar Shave Club CEO Michael Dubin told Web site Digiday last year that subscription growth has slowed since the acquisition.

P&G, meanwhile, has announced plans to buy Billie, a growing subscription-based grooming brand targeting women. P&G didn’t disclose the terms for the two-year-old, direct-to-consumer shaving and body care label, which delivers a razor starter kit to women for $9 — sans a pink tax, or the extra costs charged for women’s shaving products.

While there’s no indication the FTC will nix the deal or demand changes before it’s approved, the agency’s questioning has sent Harry’s executives running to their tech allies to lobby the watchdog on their behalf, one source said. One of those allies, Tech:NYC — an industry group that represents NY-based tech firms like Google, Facebook, eBay, Airbnb and Casper — declined to comment for this story.

Antitrust lawyer Gregory Frank of Frank LLP said that while pricing is always a concern with any merger, the FTC could also be reviewing the issues with subscription-based models, which are “geared towards inducing people to buy more than they need.”

Follow 3-www.NET
Follow
e-News.US
  
Share
e-News.Us

Category Latest Posts