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What do Tom Ford, Veronica Beard and 1017 Alyx 9SM have in common?
Not much, on the face of it. But these companies — American luxury stalwart, fashion staple and streetwear-inspired designer label — are all considering a sale, according to market sources. And they’re not the only ones.
Dozens of brands have reportedly explored potential investments in recent months, from Los Angeles women’s clothing line ALC to Ghani, whose current owner — private equity firm L Catterton — is considering selling the Danish mid-cap for up to $700 million. According to a recent Reuters report.
Other brands for – or recent consideration for – sales or investments include Kite, Canadian outerwear label Mackay and Oscar de la Renta, according to sources.
It is easy to relate migration to market conditions. Things have picked up quickly since the early days of the pandemic lockdowns that slowed both production and sales, and many brands are having their best year in business. But there are other reasons.
Many of the brands looking for sale have private investors who invested four to six years ago and are ready to exit. That’s the case for Proenza Schouler, which is backed by investment firm Mudric Capital and had marketed sales forecasts of about $57 million earlier this year, according to a source. Agreement failed.
The 1017 Alyx 9SM, designed by Matthew Williams, is a collaboration with Luca Benini’s brand platform Slam Jam, which generates just under $20 million in annual sales, sources say, as an investment to make the most of Williams’ celebrity connections — the label has been referenced in chart-topping Drake lyrics — A high-profile Nike collaboration and creative director job with LVMH-owned Givenchy.
“The company is considering raising growth capital and has been self-funded up to this point, so it has approached investors,” a spokesperson told BoF. “He showed resilience during the epidemic.”
Isabel Marant’s private equity backer Montefiore – a majority owner since 2016 – began buying the flagship label earlier this year when the outbreak hit. Style icon Veronica Beard is synonymous with American-mom-friendly gear and is looking to expand on that success with new owners.
Others are looking for a first-time investment. For example, Australia-based Ser, a largely online and direct-to-consumer label, is on pace to double revenue by 2023, according to market sources, and is entertaining the option of raising funds to open more stores and increase its digital marketing spend.
“There are a lot of young brands that haven’t had investors that have grown significantly during Covid,” said Gary Wasner, chief executive of Hilden Fashion Financial, whose fund has invested in companies such as Mackage and ALC through Inter Lux. (He declined to comment on ALC or Mackage’s plans.) “Those brands are now thinking about their options — and investing retail capital.
While some discounts are expected by the end of the year, buyers are getting more nervous.
“When there’s a risk of a recession, people get out of the consumer goods market,” Wassner said. There are very few companies competing now.
Strategic groups and private equity firms lag behind. Chinese investors, although very active before the pandemic, have lagged behind as the country’s economy suffers. While many brands continue to benefit from the post-pandemic rebound, the strange economic climate — low unemployment, high inflation and the energy shock caused by the war in Ukraine — means many potential buyers are taking a wait-and-see approach.
Elsa Berry, managing director and founder of Vendome Global Partners, said: “It’s a very selective market – too many small companies are thinking they can sell too early. “People want proof of results.”
The deals that take place may involve big brands with strong growth potential – or available at a significant discount. There are also exceptions, such as Tom Ford’s proposed sale to the Estee Lauder Companies, which already drives Tom Ford’s business through its beauty franchise.
“You can’t be a standard investor,” Wasner said. “You have to be creative. Brands today have to be unique and show real growth potential to be interested.”
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