Sign up to receive the Vogue Business newsletter for the latest luxury news and insights, plus exclusive membership discounts.
2024 has been a mixed bag for deals across fashion and beauty. From Mytheresa’s agreement to acquire (or rescue) Yoox Net-a-Porter (YNAP), to the Saks-Neiman Marcus mega-deal, economic moves that have the potential to change the landscape of luxury fashion have swept the industry. And fellow sectors like beauty have also felt the impact, with seats of power shifting under new ownership and the repositioning of key retail sectors.
The multi-brand space has been particularly susceptible to deal-making, compounded by the contemplated privatisation of Nordstrom as well as the sale of a 40 per cent stake in British retailer Selfridges to the Saudi Public Investment Fund. In Europe and the Americas, things have been especially volatile. While the impact of some deals, such as a prospective buyout of Nordstrom, will be largely regional, others, like the YNAP transaction, will have more global ramifications, given the retailer’s international reach. A level of consolidation will eventually be achieved, bringing not only stability, but also more dominant players — some of whom were virtually unknown 15 years ago.
Jonathan Dunlop, head of North American retail and disruptive commerce investment banking at J.P. Morgan, says the multi-brand sector has been facing headwinds for years, noting changing consumer behaviour, the direct-to-consumer push of brands, a shift towards lower profit concessions and the rise of digital players as factors impacting profitability. “The M&A (mergers and acquisitions) activity of the last year is both an outcome of the new realities and a reflection of a future where many multi-brand players will balance investing in growth with prioritising cash flow and maximising existing asset value,” he says. “As these deals integrate and luxury’s challenges abate, we expect to see a more rational, less promotional environment.” When it comes to who will come out on top, Dunlop says these will be companies that are able to leverage new technology to enhance customer experiences, possibly at the expense of smaller retailers unable to keep up with the rapid pace of innovation.
Unlikely bedfellows
There is still a high level of uncertainty surrounding the market, characterised by the ongoing slowdown in China, rising inflation and incoming tariffs all creating further stress and leading several businesses to press pause on innovation as they seek immediate solutions to cash flow problems. “For some, it has brought about the opportunity to diversify into adjacent product categories through partnerships or the integration of new capabilities,” says J.P. Morgan’s global head of consumer and retail investment banking, Jeanette Smits Van Oyen. Italian-French brand EssilorLuxottica carried out a $1.5 billion acquisition of VF Corp-owned Supreme last July, which saw the eyewear leader take ownership of the New York label famed for its cult streetwear status. This in time could deliver considerable benefits for Supreme’s new owners, including access to a younger generation of shoppers, a fresh product niche and an additional revenue stream, which hedges against more fragile licensing agreements that could become casualties of an unpredictable climate.
This post was originally published on this site be sure to check out more of their content.
