Fashion’s big spenders might be ready to commit in 2016.

Despite a tough year for fashion last year, mergers and acquisition activity picked up in the fourth quarter and the deals could start to get bigger as companies look to reinvent themselves and private equity tries to put more money to work.

A recent flurry of deal-making — including Sycamore Partners’ sale of Kurt Geiger to Cinven and Hudson’s Bay Co.’s talks to acquire Gilt Groupe — proves that buyers are still on the prowl.

Stefan Kaluzny’s Sycamore and Richard Baker’s Hudson’s Bay Co. have become fashion’s most committed deal-makers, often working two angles in a transaction. Sycamore, for instance, can build business for its production arm by bringing businesses such as Jones Apparel Group under its wing and selling off outliers like Kurt Geiger, while HBC can use the tech savvy of Gilt across its portfolio of department stores that includes Saks Fifth Avenue, Lord & Taylor and Kaufhof, or monetize real estate in the case of its brick-and-mortar stores.

Even though Sycamore and Hudson’s Bay have stolen the spotlight, there are plenty of other would-be acquirers still looking for the right fit (and bankers looking for their payday).

The traditional strategic acquirers like VF Corp. and private equity players are actively looking for deals. There is  $4.5 trillion in “dry powder” in the deal-making system waiting to be spent. And the stock market’s close enough to a high that sellers can say they cut a good deal.

That, together with a weak holiday season and existential challenges brought on by an increasingly digital consumer, lays the groundwork for another round of deal-making.

“Retail is a sector struggling for growth given declining mall traffic, deflationary pricing in apparel, increasing competition from new channels — i.e., — and brands going direct-to-consumer,” a group of Cowen analysts wrote in a recent report. “Given the changing landscape, certain concepts are becoming attractive from an M&A perspective for the top-line appeal, most notably off-price for its steady traffic and square-foot growth, e-commerce pure plays for the futuristic revenue stream, beauty for its stability…and ath-lesiure.”

The report singled out two groups of potential targets:

* “Tuck-in acquisitions” with relatively small market capitalizations including Ralph Lauren Corp. ($9.5 billion market cap); Michael Kors Holdings Ltd. ($7.5 billion); Lululemon Athletica Inc. ($7.4 billion market cap); Kate Spade & Co. ($2.2 billion); Tumi Holdings Inc. ($1.2 billion), and Movado Group Inc. ($621 million).

* “Retailers with core competencies/advantages that have depressed valuations vs. historical peaks” including Tiffany & Co. ($9.7 billion market cap), American Eagle Outfitters Inc. ($3 billion); Urban Outfitters Inc. ($2.8 billion), and Fossil Group Inc. ($1.8 billion).

The Cowen report noted that portfolio companies such as Hanesbrands Inc.; Signet Jewelers Ltd.; G-III Apparel Group Ltd., VF Corp., and Columbia Sportswear Co. have all benefited from prior waves of M&A and “are set up well to benefit from sector dislocation.”

There are, however, only a small number of players that could successfully complete a multibillion-dollar transaction. VF is near the top of the list of those likely candidates, since it had admitted that it’s on the hunt again, having digested the $2 billion acquisition of Timberland  in 2011.

Eric Wiseman, chairman and chief executive officer, reassured Wall Street in October that, “We are very focused on certain sectors to acquire in those sectors, and we’re focused on certain companies within those sectors. And we are working those opportunities. So that’s the good news, is there is no change in our strategy. The bad news side of it is we didn’t make any progress last quarter or we didn’t get anything done, but we are making progress on some things. Eventually something will happen. We just don’t know when that will be.”

VF is a serial acquirer and has methodically been building its portfolio of brands for more than a decade. Wiseman indicated in February 2014 that likely targets for the group would be another active or outdoor brand like its successful The North Face subsidiary, perhaps in the midtier channel. But that was almost two years ago with no deal taking place, so strategies may have changed.

And the ongoing changes in the market could push other strategic buyers who are looking to make a quantum leap in their business.

Another stretch of comparable-store sales declines could push retailers’ boards toward doing something more drastic than they have in the past, said Michael Dart, a partner in the private equity practice at A.T. Kearney.

“Maybe that’s what’s required to get to the tipping point,” Dart said. “There’s a need to rationalize capacity. There’s a need to extract benefits from duplicative overhead, real estate, etc. When is that pressure [in the market] so great that it’s worth the risk? We may be getting to that tipping point soon.”

Private equity companies are also still looking, although they typically pay less for companies than strategic acquirers that also might be willing to pay more to leverage their back office assets or take out a competitor.

Financial investors tend to borrow heavily to buy companies, so their presence in the market depends on the debt market — and junk bonds have been hit hard lately, making it more difficult to fund acquisitions.

Private equity firms generally look for companies they can help improve but then sell in a few years and make a profit. They are mindful of who will buy the company down the line and what the market will look like then. As a result, some big players might prefer to look at what they can do to create value in their existing portfolio rather than adding to it.

“Despite all this skepticism and potential volatility, the private equity community likes retail,” said Burt Feinberg, president of CIT Commercial & Industrial Finance. “They believe that the right concept can scale quickly. Through the right combination of investment in e-commerce and digital platforms, plus the expansion of the store footprint, revenues can grow dramatically.”

So what does all this mean in the end? Anything could happen in 2016.

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