A $420 million investment in First Brands by Diameter Capital has turned sour after the consumer goods firm reported a 38% drop in quarterly revenue and exited three major retail chains. The downturn marks a sharp reversal for a strategy once seen as visionary.
- Diameter Capital invested $420 million for a 67% stake in First Brands in late 2023.
- First Brands reported a 38% year-over-year revenue drop in Q4 2025, earning $298 million.
- The company exited distribution agreements with Walmart, Target, and AutoZone.
- First Brands stock fell 54% in early 2026, wiping out $1.1 billion in market value.
- Only 14% of Fram-branded products remain in retail inventory, down from 69%.
- Over 1,200 jobs are at risk due to plant closures and reduced operations.
Diameter Capital, a mid-tier investment firm based in Chicago, saw its $420 million stake in First Brands deteriorate rapidly following the company's Q4 2025 earnings report. The firm had acquired a controlling 67% interest in First Brands in late 2023, betting on the brand’s expansion into premium automotive care products, including Fram synthetic high-mileage motor oil and related additives. First Brands’ recent financial results revealed a 38% year-over-year decline in net sales, with total revenue falling to $298 million—far below the $485 million projected by analysts. This was attributed to weakened demand in the automotive aftermarket sector, exacerbated by lower vehicle miles traveled and a surge in discount alternatives from Chinese and regional manufacturers. The company also confirmed it had terminated distribution agreements with Walmart, Target, and AutoZone, impacting nearly 22% of its national footprint. The collapse has triggered a 54% drop in First Brands’ stock price since January 1, 2026, erasing over $1.1 billion in market value. Diameter Capital now faces a potential write-down exceeding $280 million on its original investment. Internal assessments suggest that only 14% of Fram-branded products remain in active retail inventory across the U.S., down from 69% at the start of the year. The fallout extends beyond the balance sheet. Over 1,200 jobs are at risk at First Brands' manufacturing facilities in Kansas City and Dallas, with two plants already halting production. Industry observers note that the failure underscores the risks of relying on niche product lines without scalable distribution or long-term consumer loyalty.