The shutdown might make for some big fashion combinations that were only dreamed of before COVID-19. 🔐
So much has changed in fashion. Stores are closed, delivery schedules have been tossed out, most consumers are locked down, cash is at a premium and the global economy is tanking. Share prices of many of the biggest names in fashion and retail are at lows not seen since the Great Recession.
That makes for a generally slow-moving market, with big deals valued at north of $10 billion — like LVMH’s $16.2 billion agreement to acquire Tiffany & Co. — extremely few and far between. But with $1.5 trillion of “dry powder” to spend, according to Prequin figures for April, private equity should not be counted out. Big players with distressed debt funds are looking for opportunities now, and those looking for growth opportunities have a finger to the wind and are planning their next moves carefully.Emanuel Chirico, chairman and chief executive officer of PVH Corp.
In luxury, Kering and LVMH have massive portfolios that could nonetheless be expanded with any number of “smaller” brands, from Prada and Ferragamo to Burberry and Moncler. Even before the crisis, all those names were mentioned as acquisition possibilities for either of the French groups.The government could step in to protect companies in a time of COVID-19 stress.
He put the types of deals into three categories — those that would consolidate sectors, diversify companies or make them more vertically integrated as firms stake out bigger claims in the supply chain. While he said the COVID-19 crisis and shutdown would not necessarily be a “reordering of the universe” in retail, it would be “the ultimate catalyst that will separate the haves from the have-nots. Those who were dominant to begin with will become increasingly even more so.”“This is going to force leaders to be more strategic than ever before, to make real decisions on things where they’re just using their best judgments,” he said. “This is where your best leaders emerge.
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