Fashion’s Top M&A Targets
In the investment community fashion is quite often a risky bet. It’s difficult for brands to differentiate themselves in a saturated market, and even harder to achieve the scale required to turn a significant profit in a short amount of time.
However, early in the pandemic, appetite for fashion acquisitions increased as investors saw distressed assets as good deals such as licensing giant ABG (Authentic Brands Group) taking advantage and purchasing Lucky Brand Jeans in August 2020 and Brooks Brothers in September 2020. Then, as winners emerged from the crisis — with 2021 sales significantly up from 2019 — valuations rose, putting still-flush investors in a race to partner with top brands.
Now, the tables have turned once again. As inflation rises and consumer spending slows, fashion brands are looking for new backers. But as stock markets sink and the likelihood of a recession looms total transaction value (in Q1 of this year) in the global M&A market dropped to $725 billion, nearly 23 percent lower than the previous quarter.
Below we have identified seven fashion labels with strong identities and sound business models that are worth giving a second look.
Isabel Marant
2022 Estimated Revenue: $320 million
The preeminent export of French bohemian-bourgeois chic since 1994, designer-founder Isabel Marant sold a 51% stake in her namesake business in 2016 to Paris-based fund Montefiore Investment, which has helped to steadily increase the label’s sales and expand its reach beyond hero products like the wedge sneaker, a global hit in the early 2010s. The company’s balanced distribution — both geographically and between wholesale, direct retail and e-commerce channels — as well as its accessible-luxury prices, gave it a leg up during the pandemic. Now, Montefiore is seeking an exit at a valuation of about $1 billion, according to multiple sources, most likely to a strategic partner that could help manage further retail expansion. While talks with interested buyer did not continue in February 2022, a deal could be back in play Q4 of this year, the source said.
Ganni
2022 Estimated Revenue: $180 million
Ditte and Nicolaj Reffstrup’s transformation of a sleepy Coppenhagen-based knitwear label into a trendy global player known for its accessible, print-heavy separates, is well-documented. In 2017 L Catterton took a majority stake in the business, providing the capital to grow its retail network to 36 stores. Now the company — whose mix of desirability and price point could help it weather a downturn — is a prime target for a new investor that could push it above $500 million in annual sales.
Jacquemus
2022 Estimated Revenue: $200 million
Jacquemus, which blends Mediterranean sensuality with youthful ease and while they are not currently seeking a backer they are a great brand to keep on your radar. They are a digital-first label with over 70 percent of overall sales generated via e-commerce. Designer Simon Porte Jacquemus’ has an uncanny ability to attract attention online in a positive way while creating must have hero products like his teeny-tiny handbags that are both conceptual and commercial hits.
Now, he has hired former Paco Rabanne and Lemaire head Bastien Daguzan as chief executive to take the label to the next level. A beauty partnership with Spanish fragrance giant Puig who owns Rabanne is in the works, and a Nike collaboration launched this summer.
Amiri
2022 Estimated Revenue: $250 million
Los Angeles-based Mike Amiri has done particularly well in menswear and denim with his ripped, skinny jeans and ornate baseball jackets. He’s monetized the aesthetic of American West Coast fashion niche. In 2019, the designer received a minority investment from Italian entrepreneur Renzo Rosso’s group OTB. The Diesel-owner tends to prefer majority investments in brands (Marni, Maison Margiela and Jil Sander are all part of OTB) so he would be a likely buyer if the brand was to sell. Amiri’s focus on denim, Rosso’s specialty, also helps.
Sézane
2022 Estimated Revenue: $140 million
Morgane Sezalory‘s direct-to-consumer label Sézane, founded in 2013, used classic French tropes with stripes and florals galore to develop an easy-to-understand aesthetic that has appeal far beyond Saint-Germain-des-Prés. Its “French girl style” is a hit in the US, where other Paris-based contemporary brands have struggled to succeed because of poorly plotted distribution strategies and sizing that’s not so friendly to many American consumers. Sézane’s online-first approach smartly positioned it as a competitor to Los Angeles-based Reformation.
Amina Muaddi
2022 Estimated Revenue: $58 million
An antithesis to the subdued flats and chunky sneakers that dominated women’s footwear for a decade past decade, Amina Muaddi’s colorful, plastic-fantastic heels that are hefty with embellishment and sculptural in shape they managed to buck pandemic trends, with sales hitting $22 million in 2020 after just two years in business. A key challenge in the footwear business is distribution, and scaling up once distribution is secured: most luxury consumers tend to favor well-known brands more than in any other category. A partner could support an expansion into retail and a deeper product assortment.
Casablanca
2022 Estimated Revenue: $40 million
French-Moroccan designer Charaf Tajer made a name for himself co-founding the Paris-based streetwear label Pigalle with Stéphane Ashpool and working with Virgil Abloh and Supreme. With Casablanca, which he launched in 2019, he became the focal point (and a contender for several high-profile creative director positions, according to sources.) The line taps into the growing demand for resort wear for both men and women, with a heavy emphasis on relaxed silhouettes like boxer shorts and bowling shirts, done in silk twills printed with novel, tongue-in-cheek motifs.