What Is The Reason Why Fashion Brands Are Sold And Sold?

Jimmy Choo

"What?" most people were puzzled when they heard that Jimmy Choo was about to remarry Michael Kors.

It happened more than two months ago, when the buyers and sellers were Coach and Kate Spade, and the atmosphere of mergers and acquisitions in the air was full.

According to the world clothing shoes and hats net, as early as April this year, HSBC (HSBC) issued a report that

The industry has already made preparations for mergers and acquisitions.

Due to the serious polarization of luxury brands, the M & a boom may be coming in 2017.

"Industry capital is always on call, valuations are at a high level and management is changing frequently."

The report therefore deduced that these market factors were enough to pave the way for trade.

Canaccord Genuity, an investment bank in Canada, observed that "industry challenges are in direct proportion to M&A, because companies in the low valley need a survival circle, and that is the case at the moment."

Former Bvlgari CEO Francesco Trapani is hosting the

The summit said: "the global M & a market is huge. It has 30 years of rapid rise of luxury goods group, and there are also small independent brands."

The example of big fish eating small fish is very common in all walks of life.

Since 1980s, the French luxury goods giant LVMH has bought 70 products by buying one step at a time.

Finally, it has reached the present scale, and its competitor, Kai Yun group, is also so.

LVMH president and CEO Bernard Arnault

LVMH's brand Louis Vuitton

Decades ago, the first few deals were based on brand managers.

When the founder dies, his successor may not be interested or has enough power to take charge of the company.

Sale under this premise is a relief to the seller.

But more mergers and acquisitions are based on more rational business considerations.

The large group has strong advantages in capital, suppliers, sales channels, marketing and so on, so that the brand that is subordinate to it will quickly move towards the international market.

From the statistics of strategy consulting firms Pambianco in Italy, the growth trend of M & A is obvious.

In 2016, there were 96 cases of mergers and acquisitions in fashion and luxury sectors, an increase of 30% over the same period last year.

Analyst Alessio Candi thinks there are two reasons behind this.

First, part of the company's accounting situation is improving; secondly, large groups hold large amounts of liquid assets.

Given that the stock market is too fast now, and other financial products, such as bonds, are not profitable, high potential companies can be a wise investment target.

Capital injection and strategic adjustment are likely to bring considerable returns to shareholders in the short term.

At present, the most active M & a market is holding companies and private equity funds. Last year, the 40% deal came from their hands.

Among them are the Chinese and Middle East buyers, such as China's acquisition of Italy's high-end jewellery brand Buccellati by the gatai group, and the French fashion brand Balmain, which is bought by the Qatar Royal Investment Fund Mayhoola at 485 million euros.

As to whether merger can bring synergy, L Capital, which is now merged with the US private Holdings Company Catterton, is L Catterton. The former CEO Daniel Piette believes that the original intention of most cases is to improve the structure of the company in the long run.

From the acquisition of shoe brand Stuart Weitzman, Coach has realized that the risk of single brand operation is far higher than that of the group, while the former can make up for its lack of footwear.

The same is true between Michael Kors and Jimmy Choo.

From the perspective of category, the two can be said to be perfect complementarity. Jimmy Choo currently sells 75% of its sales from footwear products, while Michael Kors footwear sales account for only 11% of the total sales of the brand.

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Daniel Piette believes that every luxury brand should be managed vertically, so it is difficult to share with other brands. "This is more like financial restructuring, synergy is meaningless."

However, it is worth noting that the reason why we feel that the M & A is becoming more frequent is partly due to the fact that both sides are well-known brands.

Whether Jimmy Choo, Michael Kors, or Kate Spade, Coach, are well-known fashion brands.

Kate Spade2017 autumn winter series static exhibition

Kate Spade2017 autumn winter series static exhibition

You know, the target of the acquirer is usually the supplier or the upstream company of the industry chain, so as to increase productivity and reduce costs.

But recently, they have turned their attention to smaller potential companies.

"The most attractive investment targets are those potential small companies."

Alessio Candi, an analyst at Italy, takes the example of the brand of Taiwan, "capital plus the international market expansion plan, and the revenue of 5000-6000 euros is likely to increase to 300 million euros".

Fortunately, the attitude of the investors has become more and more open.

Alessio Candi observed that with the upgrading of Italy family brand owners, young people no longer regard external investment as a flood, but rather understand the importance of capital to expand the international market.

According to DDT's view, M & A is a health indicator for various industries.

Moderately active trading market can promote brand innovation.

The reason is very simple, just like the old fishermen of Norway who put the catfish in the sardines.

More interesting reports, please pay attention to the world clothing shoes and hats net.