This year saw fashion brands plagued by high energy and material costs on the manufacturing end of the supply chain and a cost of living crisis with high inflation dampening sales and creating excess inventory at the consumer end.
On the plus side, this rocky economic climate did open the door for fashion companies and investors wishing to grow their portfolios for a reasonable price.
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Five key deals for fashion in 2023
1. Tapestry, Inc. bought Capri Holdings for $8.5bn in biggest fashion deal of 2023
The largest fashion deal of 2023 by a longshot saw the luxury fashion parent company of Coach, Kate Spade and Stuart Weitzman expand its brand portfolio by buying its rival Capri Holdings Limited, which owned Versace, Jimmy Choo and Michael Kors.
The deal, which took place in August, was valued at $8.5bn and Tapestry explained at the time it hoped to bring the group of “highly complementary brands” together and give them global reach using its data-rich customer engagement platform and diversified direct-to-consumer operating model.
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GlobalData apparel analyst Louise Deglise-Favre explained at the time that once the deal is finalised, Tapestry’s six brands combined will generate more than $12bn in annual revenue.
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By GlobalDataThis sounds lucrative on paper, but she pointed out Tapestry’s brands are more focused on the “affordable luxury” market than its rivals. Consequently shoppers in this market are more vulnerable to the increasing cost of living, making the category more at risk as rising costs continue to impact consumers’ shopping habits.
On the plus side, she noted: “The acquisition will set Tapestry as a major American fashion conglomerate, allowing it to better compete with European rivals such as LVMH and Kering, and will strengthen its position within the ‘affordable luxury’ market.”
2. Chico’s FAS, Inc. went private in $1bn deal
US fashion company, Chico’s FAS, Inc., owner of Chico’s White House Black Market and Soma, officially became a privately held company after entering a deal to be acquired by Sycamore Partners, a private equity firm that specialises in retail, consumer, and distribution-related investments.
At the time of the announcement Chico’s chair of the board, Kevin Mansell, said: “The agreement with Sycamore Partners validates Chico’s FAS’s leadership as a customer-led, product-obsessed, digital-first company with a strong record of operational excellence.
GlobalData retail analyst Neil Saunders told Just Style a deal like this was needed for Chico’s to capitalise on future growth opportunities and admitted the company would benefit from Sycamore’s “deep pockets”.
He explained: “I get the impression that there are a lot of things the Chico’s management team has wanted to do in terms of expansion or growth that have been difficult because of concerns over funding or taking on too much debt. Those obstacles will now be removed.”
He did acknowledge Chico’s FAS would lose some of its “freedom and control” as a result of the new setup, but said it appears the management of the two organisations seem to “get on well”.
“Despite some current softness, Chico’s is generally a well-run company and has a good position in the market. Sycamore has the financial firepower to build on this and accelerate expansion. Sycamore may also put some of Chico’s products into its Belk department stores,” he asserted.
3. Next acquired FatFace in £115.2m deal
UK retailer Next Plc signed terms to acquire mid-priced fashion brand FatFace for a total equity value of £115.2m ($140.03m) in October.
It means Next holds 97% of the equity and FatFace’s management holds 3% of the business.
At the time GlobalData apparel analyst Alice Price predicted Fat Face would generate immediate returns for Next without the need for significant additional resources.
She also suggested the addition of FatFace to Next’s portfolio could help it to unlock its dream of strengthening its mid to upper-priced brand offering.
Price said: “Next recognises consumers are prioritising higher quality products to achieve better value for money during the cost-of-living crisis, so FatFace’s market positioning should help it achieve this goal.”
Meanwhile, for FatFace, it was described as a great opportunity to increase its customer base and bolster its growth potential.
The brand already has affiliations with Next Plc having launched on its Total Platform earlier this year where Next fulfils orders from its third-party brands’ own warehouses within two days.
“Next’s superior online proposition and global reach will also allow FatFace to expand internationally, which has been a focus for the brand recently, with North America accounting for 7% of its sales and growing 20% in its FY2022/23,” Price noted.
4. PVH sold three brands to Basic Resources for $160m
Fashion conglomerate PVH Corp sold its Warners, Olga, and True & Co. brands for $160m to private family-owned apparel manufacturer and distributor, Basic Resources last month (November).
PVH CEO Stefan Larsson saw the transaction as an important next step in building PVH’s core brands Calvin Klein and Tommy Hilfiger into the “the most desirable lifestyle brands in the world” and help reach the company’s revenue target of $12.5bn by 2025.
He believes that as all three brands are in the intimate space they will fit well with the existing Basic Resources portfolio. “While not the most adventurous of brands, they are all pretty solid and have a good position in the market,” he said.
“Basic Resources will want to try and bolster sales and reinvigorate them, especially as some have struggled to grow over the past year or so,” he added.
5. Kering placed 30% stake in Valentino worth $1.87bn
Luxury fashion conglomerate Kering snapped up a 30% stake in Italian luxury fashion house Valentino in August for a cash consideration of €1.70bn ($1.87bn).
As part of the deal, Kering became a significant shareholder with board representation. Investment entity firm Mayhoola remained the majority shareholder with 70% of the share capital and has continued to execute its successful brand elevation strategy.
However, the agreement gives Kering the option to completely acquire Valentino in the next five years.
GlobalData apparel analyst Louise Deglise-Favre described the move as strategic given Valentino’s “desirability among consumers”.
She told Just Style that Kering’s ongoing struggle with its luxury Italian brand Gucci could be motivation for it to take full ownership of the “successful” Valentino brand.
She explained at the time that it remains uncertain if Kering will choose to fully acquire Valentino in the next five years, but “Kering will be able to capitalise on Valentino’s success while further strengthening its position as a luxury conglomerate.”
Plus, Kering’s CEO François-Henri Pinault said at the time that he was very pleased with the first step of Kering’s collaboration with Mayhoola to develop Valentino and pursue what he described as a “very strong strategic journey of brand elevation that Jacopo Venturini will continue to lead.”
Our signals coverage is powered by GlobalData’s Thematic Engine, which tags millions of data items across six alternative datasets — patents, jobs, deals, company filings, social media mentions and news — to themes, sectors and companies. These signals enhance our predictive capabilities, helping us to identify the most disruptive threats across each of the sectors we cover and the companies best placed to succeed.
