A surge in fourth-quarter mergers and acquisitions helped lift the value of middle-market M&A activity in the retail, apparel, footwear and restaurant industries last year.
A study by investment bank R.W. Baird & Co. said the number of deals valued at less than $1 billion in the sectors declined to 91 last year, down 20.9 percent from the full-year total of 115 in 2008. However, propelled by activity in the range of $100 million to $499 million category during last year’s final quarter, the value of those deals grew 32.5 percent to $9.29 billion from $7.02 billion in 2008.
In tracking deal multiples, Baird found a market leaning heavily in favor of buyers as the 2009 total came in at 6.6, compared with 7.8 in 2008 and 9.8 in 2007. The value was the lowest in any of the 12 years studied by Baird, supplanting the 2003 multiple of 6.9. Baird defines the multiple as enterprise value — equity plus debt minus cash — divided by earnings before interest, taxes, depreciation and amortization.
The increase in the value of deals within the four industries was attributable entirely to activity in the fourth quarter amid signs of an economic recovery. In the final three months of 2009, the number of deals rose to 24 from 22 in the previous year, but their value more than doubled, rising 125.3 percent to $2.84 billion from $1.26 billion.
It was essentially the middle of the middle market that pulled the numbers up. There were no disclosed deals in the $100 million to $499 million range in the fourth quarter of 2008, while those in its 2009 counterpart numbered eight with an aggregate value of $2.1 billion. Among these were Sally Beauty’s acquisition of Sinelco International, Billabong International’s purchase of Swell Inc., Genesco Inc.’s deal for Sports Fan-Attic Inc., Iconix Brand Group Inc.’s purchase of a stake in Mark Ecko’s brand portfolio and Li & Fung’s Wear Me acquisition.
The uptick supports the forecast of Joseph Pellegrini, managing director of Baird’s consumer retail team. Pellegrini said he expected a continuation of the flight to value in M&A, similar to the one going on with shoppers seeking bargains.
“It will be a mantra,” he said, noting that acquirers will remain selective and focused on companies for which their back-room savvy can provide immediate operating benefits. He’s also upbeat about the opportunities for a company such as Iconix to take acquired brands and give them new life by adjusting their distribution into markets more receptive to them.
“The days of making acquisitions for the sake of making acquisitions — that’s not working anymore,” he said.
In yet another fashion show shuffle, @elleryland is moving its show in sync with the Paris couture calendar — though the brand is still keeping one foot on the city’s ready-to-wear schedule. Their runway show in January will coincide with the launch of a new strategy: designing two main collections each year instead of four, which will then be released in four drops. “As we all know, the system needs to change. We need to show sooner to give time back to artisans and designers to do what they do best — create,” said founder Kym Ellery. #wwdnews #wwdfashion (📷: @kukukuba)
@maxmara’s classic 101801 coat was the cornerstone of its pre-fall 2018 collection. The design team expanded the traditional double-breasted, kimono-sleeved style into a trapeze coat, lean belted styles and a peacoat and presented them in monochromatic looks – like the camel one pictured here. #wwdfashion #prefall18 (📷: George Chinsee)
The @cfda has shifted the dates of #NYFW, with Men’s showing on February 5 through February 7, and Women’s will directly follow, running from February 8 through 14. The preliminary schedule will be released on the CFDA’s web site in the next few days, but Mark Beckham, VP of marketing for the CFDA, revealed that @rafsimons will be back to close the men’s-specific part of the week with a show on February 7 #wwdfashion (📷: Kelly Taub)
@ferragamo is introducing a new space dedicated to the development of women’s and men’s leather good samples. The laboratory, which is created eco-friendly materials and designed to reduce the environmental impact of the manufacturing processes, will allow the company to expand its accessories offering through traditional artisanal approaches. #wwdfashion (📷: @aitorrosasphoto)
How does a “regular, degular, schmegular” girl from the Bronx, N.Y., become a Grammy-nominated artist with a certified platinum record in less than a year? Call it the @iamcardib come up. The 25-year-old has become a musical sensation, and the fashion world is taking note. “If I could describe her style I would say drama. She’s really into the dramatics,” says Cardi B’s stylist @kollincarter. See how Carter styles her bold and out there looks with the link in bio. #wwdfashion
“There is no formula. There is no guideline. I can watch Ted Talks all day, but there is no one who can advise me on exactly what it is I should be doing,” said @ronniefieg, CEO of @kith, in an interview with WWD’s @ariahughes at the brand’s new SoHo office in Manhattan. Head to WWD.com to see how Fieg went from hanging out in shoe stockrooms at 13 to building his own business. #wwdfashion (📷: @weston.wells)
@fearofgod and @maxfieldla have teamed up on a pop-up installation. The store, located in the gallery space across from Maxfield’s Melrose Ave location, is the site of the brand’s House of God pop-up in which Fear of God founder @jerrylorenzo has created a church-inspired installation. A dozen vintage church pews sit in front of an LED screen playing 90s gospel singers in an effort to re-create an environment akin to a Southern Baptist Church, Lorenzo explained. Read more about the pop-up on WWD.com #wwdfashion (📷: Jennifer Johnson)
Known for his sleek, sophisticated American glamour, Norman Norell is the subject of an upcoming exhibition at @fitnyc. “Norell: Dean of American Fashion,” which runs from February 9 through April 14, will feature approximately 100 ensembles and accessories. His best work is exemplified by the designer’s glittering “mermaid” gowns frosted with thousands of hand-sewn sequins – like the one pictured. (📷: William Helburn) #wwdfashion
For pre-fall 2018, @balmain didn’t let go of the glitz. A crystal embroidered baseball jacket priced at around $40,000 hangs in the “couture” section of the brand’s first men’s pre-collection. Sporting the words “Balmain Army” across the back, the item took around two months to make. “When it was completed, it was like Christmas, it was like, ‘It’s done, it’s exactly what I wanted,’” said Balmain’s creative director @olivier_rousteing during a tour of the collection in a Paris showroom on Monday. #wwdfashion