M&A À La Mode

This year has seen significant numbers of mergers and acquisitions in the global fashion industry, with much of the action centered in the luxury and/or direct-to-consumer spaces. Some of the reasons given for the high level of activity include consolidation in the digital-first DTC space; the need to strengthen omnichannel distribution capabilities; a wish to consolidate power within a category or retail sector; and the desire to expand, both geographically and into new categories and price points. Some of the purchasers are going concerns or holding companies that are looking for synergies, while others are private equity firms hoping to finance growth and see a return on investment.

Some examples of M&A deals, all focused on companies involved in licensing, that have taken place in 2023:

• Last week Consortium Brand Partners said it would acquire a 70% controlling stake in Draper James, the lifestyle label founded by actress Reese Witherspoon, which has direct-to-consumer origins. Existing leadership will remain with the brand. Plans for the label include international expansion as well as new categories such as gardening and food.

• Also last week, brand management company WHP Global announced it would acquire a majority interest in Netherlands-based denim brand G-Star RAW.

• Separately, WHP and fashion retailer Express teamed to acquire digital-first menswear brand Bonobos for $75 million, representing the first acquisition for the two companies since they entered into a strategic partnership early in 2023.

• In one of the highest-profile combinations, Tapestry, owner of Coach, Kate Spade, and Stuart Weitzman, agreed to acquire Capri Holdings, owner of Jimmy Choo, Michael Kors, and Versace. The two companies together generate revenues of more than $12 billion. Tapestry said the purchase would give it a broader portfolio of brands that would benefit from its data-driven direct-to-consumer engagement platform as well as create cost synergies.

• Authentic Brands Group has been acquiring companies at a fast clip this year, adding British footwear label Hunter Boot, with Batra Group serving as the core licensee in the U.K. and Europe and Marc Fisher Footwear in the U.S.; fashion brand Vince, which becomes a subsidiary called ABG Vince; footwear brand Rockport, with the core line produced by Marc Fisher; and Boardriders, including the Quiksilver, Billabong, Roxy, and other surf- and snow-related labels.

• In a combination of two online luxury retailers, Farfetch acquired a majority stake in Yoox Net-a-Porter Group, with U.K. competition authorities approving the move in March. Seller Richemont maintains a minority share, but Farfetch is expected to assume the remainder of ownership within five years.

• FullBeauty Brands, an online and catalog seller of inclusively sized apparel, lingerie, and footwear, purchased digital-first plus-size fashion brand Eloquii from Walmart, which had taken over its ownership in 2018.

• True Capital purchased a controlling stake in Apparel Brands, owner of Ed Hardy and other labels. Its plans include strengthening the properties through channel and category expansion, as well as acquiring complementary IP at different price points.

• The Estée Lauder Companies bought the Tom Ford brand, with the latter’s long-term licenses with Ermenegildo Zegna (for most key categories) and Marcolin Group (for eyewear) remaining in place. As part of the transaction, Zegna acquired ownership rights to Tom Ford International and its Tom Ford Fashion brand, of which it already owned 15% prior to the deal.

• Advent International, a private equity investor whose portfolio includes an investment in Lululemon Athletica, among others, acquired a majority stake in luxury brand Zimmermann, based in Sydney, Australia. Former owner Style Capital retains a significant minority share.

• U.K.-based sports retailer JD Sports took sole ownership of Poland-based sports retailer Marketing Investment Group, raising its share from 60% to 100%. The deal follows the acquisition of Iberian Sports Retail; JD also has suggested it intends to purchase a French sports brand, Courir.

• Ariela & Associates purchased Parade, a U.S.-based, body-positive, fast-fashion lingerie label. Ariela produces inclusively sized intimates under the Curvy Couture and Smart&Sexy brands, and, under a license that has been in place for more than 20 years, Fruit of the Loom.

In addition to these acquisitions, all of which involve new majority owners, there have been a number of significant minority investments in the fashion and lifestyle space this year as well.

Retailer Frasers Group, owner of House of Fraser, Sports Direct, and other retail brands, is increasing its minority share in Boohoo Group, U.K.-based owner of digital fashion purveyors such as Nasty Gal, Boohoo, Pretty Little Thing, and others, as well as labels such as Oasis and Debenhams; the latter two have roots in traditional retail but have been converted to digital-first brands. Just this year Frasers has doubled its stake from 5% to 10.42% in Boohoo, while also quadrupling its share of online retailer ASOS, to close to 20%.

Meanwhile, French luxury conglomerate Kering, which bought fragrance house Creed this year, took a 30% stake in Valentino, adding it to a portfolio that includes Gucci and other labels. Investment fund Mayhoola was the seller, and plans call for Kering to take over the brand entirely by 2028. Separately, Groupe Artémis, the holding company that owns Kering, announced last week that it was buying Hollywood talent agent (and licensing agent) CAA.

In another example, Chinese online fast-fashion brand Shein, which has been expanding globally, took a 30% interest in SPARC Group, the joint venture of Authentic Brands Group and Simon Property Group, while SPARC took a minority share in Shein. The mutual investments also kicked off a strategic partnership whose first step was to take advantage of synergies between ABG’s Forever 21 and the Shein brand, including expanding the former’s global distribution and testing Shein products in Forever 21 stores in the U.S.

Many observers of the worlds of finance and fashion expect the M&A trend to continue for the foreseeable future as companies try to position themselves for long-term success in the face of transformations in how consumers shop for and purchase fashion and other consumer goods.