BUYER OF BANKRUPT BRANDS IN DISTRE$$
Hard-sell REV may ditch assets or reorganize amid losses
A flashy firm that has scooped up a slew of bankrupt retail brands including RadioShack, Pier 1 Imports and Modell’s Sporting Goods is now in danger of filing for bankruptcy itself, The Post has learned.
Miami-based Retail Ecommerce Ventures — whose CEO Tai Lopez is a self-help guru who lists Bill Gates and Mahatma Gandhi as inspirations and charges up to $1 million a year for “coaching and consulting expertise” — has spent $120 million to amass a portfolio of aging retail names that also include Dressbarn, Linens ’n Things, Stein Mart and the Franklin Mint, according to a source with knowledge of the firm’s finances.
But lately, Lopez and his cofounder Alex Mehr — a former NASA scientist who helped orchestrate REV’s acquisitions after selling his Zoosk dating site in 2019 for $298 million — are opening the books of their privately owned licensing company to prospective investors for a potential “sale of all their assets, a bankruptcy filing or Hail Mary financing,” the source said.
“They are burning through cash,” said one source with direct knowledge of the situation.
REV’s revenues and losses last year were both about $60 million compared with about $150 million in sales in 2021 and about $90 million losses, according to the source. It has racked up about $200 million in debt, the source added.
Mehr and Lopez did not respond to multiple emails and calls for comment.
On Thursday, The Wall Street Journal reported that REV has hired law firm Kirkland & Ellis to explore restructuring options. The company recently said it will pause payments on its debts, the Journal reported, citing a lawsuit filed by a vendor this week.
A major red flag surfaced last month when discount retailer Tuesday Morning filed for Chapter 11 — just months after Mehr and Lopez paid $35 million for a controlling stake in the Dallas-based chain last September.
“The realization that an investment they made less than a year ago is not worth what they put into it could have implications for them, because they have investors,” said Adam Stein-Sapir, portfolio manager of Pioneer Funding Group, which focuses on distressed debt.
“It makes it more difficult for REV to raise more funding with investors who might be thinking, ‘You guys just lit millions of dollars on fire.’ ”
‘Get rich’ guru
Lopez — who boasts some 8 million followers on TikTok, Instagram, YouTube, Snapchat and Facebook — has written self-help books, including his “67 Steps” on how to become “wealthy” and “happy” that incorporate the “teachings of powerful and famous people like Bill Gates, Charlie Munger, Peter Drucker, Gandhi, and my personal mentors.”
Lopez teamed up with Mehr — an Iranian-born immigrant with a Ph.D. from the University of Maryland who worked in “risk and safety management of NASA’s space exploration missions,” according to securities filings — at the height of the retail carnage in 2019, when nearly 10,000 stores went out of business.
REV snapped up the rights to the chains’ intellectual property, shedding the brick-and-mortar locations with a plan to run them as onlineonly businesses. They shelled out
[They] are not able to get regular merchandise [and] are selling stuff from 2021. It’s all outdated. —Former Modell’s CEO Mitch Modell
$20 million for Pier 1 Imports, $3.6 million for Modell’s and $6 million for Stein Mart.
“They were a high-octane machine that grew very fast,” said one brand licensing executive who met with the pair early during their rise.
Before buying Tuesday Morning, REV raised capital through a series of investor webinars over Zoom and emails seeking “accredited investors” — mid-sized whales with a net worth over $1 million, excluding primary residence, and income over $200,000 or $300,000 with a spouse or partner, as defined by the Securities and Exchange Commission.
Last July, Mehr sent clients an email with the come-on: “Me and Tai closed a huge deal to buy Bodybuilding.com, a brand doing more than $100 million/year. Get on Tuesday’s Investor Orientation Call Tomorrow . . . if you want more details on our deals that pay up to 25% a year in monthly payments.”
Two weeks later, Mehr sent another email: “Did you realize for every $300K invested we will send you up to $60,000 a year?” And on Sept. 12: “Want to get in on REV’s private deal flow? We already paid out over $25 million to investors!”
In fine print, the emails also say that “if you are not an accredited investor, you are not allowed to participate in the call or the deals” and they warn “you could lose some or all of your money by participating in off-market deals.”
The promotional emails appear to have stopped in November. REV’s methods for luring investors — in particular promising certain returns — could also land it in legal hot water, said David Tawil, president of ProChain Capital. “Federal regulatory agencies, including the SEC, are very sensitive to retail investors being sold hard with guaranteed returns without any substantiation,” Tawil told The Post.
Scarce, old merch
Meanwhile, a quick review of REV’s collection of retail sites signals trouble, industry sources note. The now-bare-bones Modell’s
site looks like it hasn’t been updated for months.
“Football season is right around the corner!” reads the first message after clicking the NFL tab. The NFL season ended last month. Other tabs that promise licensed caps, jerseys and sports regalia are empty. The few available offerings include barbecue grill covers, T-shirts and wallets with random sports logos.
“This is crazy,” the retailer’s former CEO Mitch Modell fumed in an interview with The Post. “[They] are not able to get regular merchandise [and] are selling stuff from 2021. It’s all outdated.”
Modell claimed he was rebuffed by Lopez shortly after REV scooped up the former Big Apple mainstay’s brand for nearly $4 million in 2019.
“I was trying to protect my brand, but there was no interest on his part,” Modell said.
REV made headlines in December 2021 when it announced its plan to rebrand century-old RadioShack into a cryptocurrency exchange platform. This week, there was no mention of crypto on the site, which still promotes Cyber Monday and offers under “new arrivals” products like guitars, ukuleles and toasters.
Last June, RadioShack drew scorn when its Twitter account began using profane language and drug references — an apparent publicity stunt to draw attention to the fizzled crypto venture.
Elsewhere, the Linens ’n Things site features just a handful of comforters under the “bedding basics” tab. Pier 1’s usually upscale glassware and china have been replaced by more low-rent offerings.
“It looks to me like they are buying exclusively from close-out retailers like TJ Maxx and Marshall’s and whatever is left when they don’t want merchandise anymore,” said a distressed debt and brand licensing expert who did not want to be identified.
“They have an amalgamation of old, mediocre or not relevant brands selling so many items that are sold out or not interesting,” the expert added. “Their sales can’t be very good.”