INTREPID INVESTMENT BANKERS LLC
Apparel and Retail Industry Overview
Mergers & Acquisitions activity has been very uneven and sector specific—the denim sector has proved to be the hottest.
• Late last year, FAST RETAILING CO., LTD. acquired a majority stake in J Brand Holdings LLC.
• Archetypes Inc. has made a strategic investment in Genetic Denim, buying close to 50% for an undisclosed sum.
• TowerBrook Capital Partners L.P. made a majority investment in Kaporal, a French-based wholesaler and retailer of men and women’s fashion. The transaction is expected to close in July 2013.
• TowerBrook also announced earlier this month that it plans to purchase True Religion Apparel Inc. (TRLG) for $32 a share.
The luxury sector has also seen some major activity;
• In April, Kering announced the signing of an agreement with RA.MO S.p.A to acquire a majority stake in the Pomellato Group. The transaction is subject to the approval of the competition authorities and is expected to be finalized in the coming weeks.
• LVMH Moet Hennessy Louis Vuitton SA (MC) plans to acquire Bulgari SpA (BUL) for about 3.7 billion euros ($5.2 billion) to double the size of its watches and jewelry unit in what would be its biggest acquisition in at least a decade.
Apparel and Footwear M&A Trends
In terms of acquisitions, corporations have been more active than private equity firms and recent examples include;
• PVH Corp.’s (NYSE:PVH) acquisition of The Warnaco Group, Inc. and Fast Retailing’s acquisition of J Brand
We are seeing fewer new brands ready for acquisition due to growth challenges—retailer rationalization and decreased access to financing make it tougher for younger brands to grow at the same speed as was witnessed in previous years.
Sellers are achieving higher multiples of EBITDA than in the past few years;
• Premium brands in the apparel space can now trade at 8.0x – 10.0x EBITDA verses 6x – 8x for the same brands only two to three years ago;
• Cash rich funds and cheap debt financing contribute to this trend—it’s a seller market with a limited inventory of quality growth brands.
The Apparel and Retail Industry Overview has been brought to you by Intrepid Investment Bankers LLC. Intrepid is a leading mergers and acquisition, corporate finance and strategic advisory firm with a dedicated team of experts who specialize in the branded apparel and retail industry.
Appendix: Index Details
Apparel Retailers Index: Abercrombie (ANF), Aéropostale (ARO), American Eagle (AEO), Ascena Retail Group (ASNA), Buckle (BKE), Chico’s (CHS), Children’s Place (PLCE), Express (EXPR), Gap (GPS), Guess? (GES), Jos. A Bank (JOSB), Limited Brands (LTD), Lululemon Athletica (LULU), Men’s Warehouse (MW), Urban Outfitters (URBN)
Apparel Wholesalers Index: Fifth & Pacific Companies (FNP), Hanesbrands (HBI), The Jones Group (JNY), PVH Corp. (PVH), V.F. Corporation (VFC)
Department Store Index: Bon-Ton Stores (BONT), Dillard’s (DDS), J.C. Penney (JCP), Kohl’s (KSS), Macy’s (M), Nordstrom (JWN), Saks (SKS)
Footwear & Accessories Index: Adidas (ADS), Brown Shoe Co. (BWS), Coach (COH), Collective Brands (PSS), CROCS (CROX), Deckers Outdoor Corp. (DECK), Fossil (FOSL), Genesco (GCO), K-Swiss (KSWS), Nike (NKE), Skechers (SKX), Steve Madden (SHOO), Swatch Group (UHR), Tumi Holdings (TUMI), Vera Bradley (VRA), Wolverine World Wide (WWW)
Footwear Retailers Index: Brown Shoe Co. (BWS), Collective Brands (PSS), DSW (DSW), Finish Line (FINL), Foot Locker (FL), Genesco (GCO), Shoe Carnival (SCVL)
Home Index: Bed Bath & Beyond (BBBY), Ethan Allen Interiors (ETH), Kirkland’s (KIRK), Pier 1 Imports (PIR), Tuesday Morning Corp. (TUES), Williams-Sonoma (WSM)
Luxury Brands Index: Burberry Group (BRBY), Christian Dior (CDI), Hermès International (RMS), LVMH Moet Hennessy Louis Vuitton (MC), PPR SA (PP), Prada (1913), Ralph Lauren (RL)
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The Apparel and Retail Industry Overview has been brought to you by Intrepid Investment Bankers LLC. Intrepid is a leading mergers and acquisition, corporate finance and strategic advisory firm with a dedicated team of experts who specialize in the branded apparel and retail industry. Data source for all charts: Capital IQ.
