Why so many fashion brands are for sale right now

Why so many fashion brands are for sale right now

What do Tom Ford, Veronica Beard and 1017 Alyx 9SM have in common?

Not much, at first sight. But these companies – an American luxury mainstay, a contemporary market mainstay and a streetwear-inspired designer brand – are all planning to sell, according to market sources. And they are not alone.

Dozens of brands have reportedly explored potential investments in recent months, from Los Angeles-based womenswear line ALC to Ganni, whose current owner – private equity firm L Catterton – aims to sell the Danish sensation mid-priced up to $700 million, according to a recent Reuters report.

Other brands are considering – or have recently considered – sales or investments, including Khaite, Canadian outerwear brand Mackage and Oscar de la Renta, sources say.

It is easy to relate the inflow to market conditions. After the early days of the pandemic shutdowns, which slowed both production and sales, things have picked up speed and many brands are coming off their best business year. But there are also other reasons.

Many brands looking for a sale have private equity owners who invested four to six years ago and are ready to exit. Such is the case with Proenza Schouler, which is backed by investment firm Mudrick Capital and entered the market earlier this year with forecast sales of nearly $57 million, according to a source. A deal did not materialize.

1017 Alyx 9SM designed by Matthew Williams, which is a long-time partner of Luca Benini’s Slam Jam brand platform and generates less than $20 million in sales per year, sources say, has considered an investment to help capitalize more about Williams’ celebrity relationships — the label has been referenced in chart-topping Drake lyrics — high-profile Nike collaborations and creative director work with LVMH-owned Givenchy.

“The company is considering raising growth capital and has been approached by investors as it has been self-funded so far,” a spokesperson told BoF. “It has shown resilience during the pandemic.”

Isabel Marant backer Montefiore – majority shareholder since 2016 – began buying the label, which has excelled during the pandemic, earlier this year. Veronica Beard, known for her sleek and American mom-friendly gear, is of a similar size and may look to build on that success further with new owners.

Others are seeking a cash injection for the first time. For example, the Australian company Sir. The label, which is primarily online and direct-to-consumer, is on track to double its revenue by 2023, according to a market source, and is considering the possibility of raising funds to open more stores and increase their digital marketing spend.

“There are a lot of young brands that have never had investors that have grown significantly during Covid,” said Gary Wassner, CEO of Hilldun, a fashion financier, who has also invested in companies like Mackage. and ALC through its fund, InterLuxe. (He declined to comment on ALC’s or Mackage’s plans.) “These brands are now considering their options — and retail requires capital investment.”

While some transactions should take place by the end of the year, buyers are increasingly worried.

“When you worry about recession, people drop out of the consumer goods market,” Wassner said. “There are very few companies competing today.”

Strategic groups such as private equity firms fell. Chinese investors, although quite active before the pandemic, also retreated as the country’s economy suffered. While many brands continue to benefit from the post-pandemic rebound, the strange economic situation – low unemployment, combined with high inflation and the energy shocks caused by the war in Ukraine – means that many potential buyers are waiting and waiting. see approach.

“It’s a very selective market – too many small businesses think they can sell too soon,” said Elsa Berry, managing director and founder of Vendome Global Partners. “People want proof of results.”

The deals made will likely involve bigger brands with solid growth potential – or are available at a steep discount. There are also special cases, such as the proposed sale of Tom Ford to the Estée Lauder Companies, which already operates much of Tom Ford’s business through its beauty license.

“You can’t be a standard investor,” Wassner said. “You have to be creative. Brands today need to be truly special and show real growth potential to be compelling.

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