Upsurge in High-End Fashion M&A Activity Signals Renewed Deal-Making Interest
After a cautious start to 2023, the fashion luxury deal market has sprung to life, defying economic uncertainties and signaling a potential resurgence. The world held its breath as high inflation, high interest rates, and recession fears weighed heavily on dealmakers, resulting in a significant drop in retail deals and total deal value.
However, a sudden shift occurred as the luxury sector witnessed a surge in activity during the summer. Kering, leading the industry, set the tone with its strategic acquisitions. First, the high-end fragrance house Creed was acquired for a reported $1.5 billion in late June. Then, Kering solidified its position by purchasing a 30 percent stake in Valentino for 1.7 billion euros, with an option to gain full control by 2028.
Compagnie Financière Richemont, another major luxury player, confirmed this emerging trend by acquiring a controlling stake in Gianvito Rossi, making a statement in favor of sophisticated heels amid the sneaker-dominated market.
Each luxury deal serves as a data point that bolsters the market’s confidence. The Valentino deal, in particular, reflects a valuation of 16.3 times the brand’s earnings before interest, taxes, depreciation, and amortization (EBITDA) of 350 million euros. This pricing aligns with valuations in the high luxury segment, reaffirming the industry’s robustness.
For Kering, the acquisitions mark an attempt to recapture momentum after its flagship brand, Gucci, experienced a slowdown. The inclusion of both Creed and Valentino in its portfolio helps reassert Kering’s position as an uber-luxe powerhouse.
While the luxury M&A market is showing signs of revival, observers do not expect it to go into overdrive. However, the return of mergers and acquisitions, alongside IPOs, indicates a renewed optimism within the industry. Birkenstock’s exploration of options and Skims, owned by Kim Kardashian, preparing to go public are clear signs of growing confidence.
In this context, luxury brands with deep heritage and a focus on ultra-high net worth individuals are poised for continued activity. As the aspirational consumer segment faces challenges, the luxury sector remains an attractive target for strategic investments and partnerships.
The luxury deal market’s reawakening reflects a newfound optimism in the industry, signaling that major players are ready to make bold moves in the pursuit of growth and market positioning. As the year progresses, the luxury sector’s upward trajectory is likely to continue, driven by resilient brands that cater to the world’s elite consumers.