Just Style

Filings signal: Apparel deal-making in July grows against geopolitics concerns

A well-executed inorganic growth strategy remains a top priority within the apparel industry.

Each week, Just Style’s journalists pick out insights from company filings that highlight sentiments in our sector. These filings signals are based on GlobalData’s analysis of earnings statements, call transcripts, investor presentations and sustainability reports. They tell us about key topics on the minds of business leaders and investors, and the themes driving a company’s activities.

This new, thematic filings coverage is powered by our underlying Disruptor data which tracks all major deals, patents, company filings, hiring patterns and social media buzz across our sectors.

Deal-making, inclusive of mergers and acquisitions (M&A) and strategic partnerships, was the second most important theme in apparel company filings in July, with 525 mentions among the primarily public companies tracked by GlobalData's company filings analytics database. It was also the fastest-growing theme, with 6% growth in mentions between June and July.

Portfolio diversification, deal-making increases apparel shareholder returns in July

In a trend-driven sector that is also feeling the brunt of depressed consumer sentiment, a well-executed inorganic growth strategy has been cushioning the likes of luxury fashion company LVMH and Authentic Brands Group, which owns UK fashion retailer Ted Baker among others, against industry headwinds. Global fashion infrastructure company PDS, for example, signed a long-term strategic partnership with Authentic Brands Group in April, with the aim of bringing the Ted Baker brand to a global audience.

Other apparel and fashion companies active in M&A over the past 19 months include Frasers Group (nine deals worth over $1bn), Next (five deals worth over $70m), and India-based Aditya Birla Fashion and Retail (two deals worth over $200m).

Frasers Group reported 16% revenue growth between FY2022 and FY2023, alongside operating profit growth of 61%. Meanwhile, Next reported sales of £5bn for the fiscal year ended January 2023 (FY2023), an increase of 8.8% over FY2022.

Indeed, analysis by market research company McKinsey in 2020 found significant differences (up to 10.8 percentage points) in total shareholder returns between companies active in M&A (completing more than one M&A deal per year on average) and those that weren’t.