Each week, Just Style’s editors select a deal that illustrates the themes driving change in our sector. The deal may not always be the largest in value or the highest profile. But we select it because of what it tells us about where the leading companies are focusing their efforts, and why. We pick apart the deal itself, and the industry theme behind it. This new, thematic deal coverage is driven by our underlying Disruptor data, which tracks all major deals, patents, company filings, hiring patterns and social media buzz across our sectors.

Inside the Aden & Anais, Inc deal

Aden & Anais Inc is a global designer and manufacturer of infant brands selling under the labels Halo and aden + anais. The latter was founded in 2006 by a mother of four, Raegan Moya-Jones, and offers a range of design-conscious, hand-crafted soft goods like premium swaddles, bibs and babywear that combine style and functionality.

Collectively with Halo, the brands are known for their innovative and high-quality baby products as well as their commitment to product safety, craftsmanship, functionality, and aesthetic appeal, which has helped build a customer base.

Private equity firm Transom, which acquired Aden & Anais Inc for an undisclosed amount, strives to create long-term value by partnering with established businesses and helping them navigate transformative growth.

Transom points out that its functional pattern recognition, access to capital, and ARMOR Value Creation Process combined with management’s industry expertise can support improved operational efficiency, significant top-line growth, cultural transformation, and overall distinctive outcomes.

Why the deal matters

From an operations perspective, the company Aden & Anais will function as an independent entity within Transom’s portfolio of companies. This acquisition will provide both Halo and aden + anais brands with additional resources, expertise, and financial backing to accelerate their product innovation, expand into new markets, and deepen customer relationships.

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Transom Capital believes this to be a strategic acquisition aimed at leveraging its operational expertise, industry knowledge and extensive network to further propel the company’s growth trajectory.

“We believe the juvenile products space has significant opportunity for innovation and Halo/aden + anais are two of the strongest brands to foster creative product development, marketing, and consumer loyalty. We recognise the tremendous potential that the company holds, and we are committed to supporting its growth as a market leader in the premium baby and parenting industry,” said Russ Roenick, managing partner at Transom.

Doug Gillespie, CEO of Aden & Anais Inc, added: “Transom Capital’s deep understanding of consumer brands, combined with their track record of fostering growth and operational excellence, makes them the ideal partner for both brands. We are excited to embark on this new chapter, confident that our shared vision will unlock significant opportunities for our brands and allow us to better serve parents and caregivers worldwide.”

Key takeaways for players in this space

It was only in late 2022 that UK mum and baby products retail giant Mothercare returned to profitability after shifting to a franchise model following its collapse into administration in 2019.

Industry analysts blamed the downfall on “years of underinvestment” in the online business and its inability to differentiate itself as a specialist for young families and expectant parents, compounded with fiercer competition on price, convenience and overall customer experience.

“Put simply, they have been left behind in today’s rapidly evolving market and the board has been unable to restructure the business fast enough to cope with a new retail paradigm that has emerged,” Richard Lim of Retail Economics said at the time.

It came around the same time US brand Destination Maternity filed for Chapter 11 bankruptcy protection.

The retailer, which attributed its growth decline to a “challenging retail environment,” operated Destination Maternity, A Pea in the Pod, and Motherhood stores, and said it was exploring options including the sale of the company.

It was subsequently acquired by BCBG Max Azaria and Ben Sherman owner Marquee Brands for a reported $550m.

In 2021, Marquee Brands announced a credit facility that it planned to use to ramp up Destination Maternity’s digital presence after it closed its final store locations in 2020.

Of course, if we examine the recent landscape of babywear and baby product retailers, we can consider the Next vs Jojo Maman Bebe case from last year, which saw Next and a cohort of investors snap up the latter.

Jojo Maman Bebe will undoubtedly benefit from Next’s economies of scale. And Next is also quietly confident about the launch of its Total Platform, which has been brought forward to October 2023. Total Platform allows other brands to use its large-scale IT, warehousing and distribution infrastructure for their own e-commerce operations.

These three examples alone are enough to suggest there is some strong belief that the future for mum and baby products and babywear does not lie in huge retail chains with an abundance of store estate.

GlobalData retail analyst Emily Salter, previously commenting on Mothercare, pointed out: “Many previous Mothercare shoppers whose closest store has closed will have turned to online behemoth Amazon instead, attracted by its wide range of brands, lower prices and convenience, as well as online baby specialist PreciousLittleOne, which offers a range of branded and own-branded products.”

Meanwhile, Chloe Collins, head of apparel at GlobalData, notes the babywear market is fairly resilient despite the current cost of living pressures, thanks to its essential nature.

She believes Mothercare’s store closures left a gap in the market leaving room for newer, fresher brands like Aden & Anais to take market share, with premium brands being chosen for gifting purposes.

SMEs such as aden + anais that have a strong online presence also have the luxury of being able to adapt faster as consumer needs evolve, something larger high street chains would struggle to do.

In fact, Clive Whiley, the chairman of Mothercare, pointed out that at the time of Mothercare’s collapse the UK high street is facing a near-existential problem with intensifying and compounding pressures across numerous fronts, most notably high levels of rent rates and the continuing shifts in consumer behaviour from high street to online.

In hindsight, bigger retail chains like Mothercare and Destination Maternity saw a recurring trend of dwindling finances. Both retailers failed to keep up with the changing market given the heavy debt along with competition from other retailers offering cheaper options. The retail market is volatile with customers’ tastes constantly evolving and external factors weighing in, and this probably paved the way for smaller and independent baby and maternity apparel brands like aden + anais and Halo.

The best way forward it seems is to operate through collaborative models and/or franchises, which can add to the brand’s existing resources. Leveraging on each others’ technologies, strengths, brand popularity and capital will only make it easier to navigate the volatile waters of the retail market.

More research:

Apparel Industry Mergers and Acquisitions Deals by Top Themes in Q1 2023 – Thematic Intelligence

Niche Clothing in the Apparel Industry – Analysing Key Trends and Top Brands