Despite high interest rates, geopolitical conflicts and an economy in flux, the consumer deal market is showing strong signs of a rebound — and the retail sector is leading the way, according to a new report.
Fifty-two percent of announced and completed M&A transactions in the first half of 2024 came from the retail sector, according to a Thursday report from PwC, which analyzed data from S&P Capital IQ. Across the entire consumer landscape, the report found that consumer deal volume was up 7 percent in the first four months of 2024 compared to the same the prior year. And total deal value in the first quarter of 2024 hit the highest levels since the fourth quarter of 2022.
“Challenges persist, but optimism around M&A in the consumer markets sector is starting to return as dealmakers use M&A to adapt to changing preferences and reinvent their business models,” said PwC’s consumer markets deals leader Alberto Dent in a statement.
The report found that consumer companies have been more inclined to pursue deals to divest assets to realign their portfolios or acquire assets to boost existing operations. Companies are being driven by brands or products that emphasize sustainability or offer a technological edge in the form of artificial intelligence, the report said.
“Amidst rising input prices, small companies in the consumer markets sector are turning to acquisitions for scale and cost reduction,” Dent said. “With total deal value reaching its highest levels since 2022, this strategic approach enables companies to navigate margin pressures, achieve operational efficiencies and position themselves for growth in a challenging market environment.”
When it comes to footwear, deal activity has certainly begun to heat up in the last few months. Just last week, RG Barry Corp. revealed it had been acquired by the Marubeni Growth Capital U.S., a subsidiary of the Tokyo-based Marubeni Corp. At the time of the announcement, RG Barry chief executive officer Bob Mullaney said the investment would help the company target new acquisitions moving forward that would likely live in the footwear space.
Throughout the most recent quarter, several executives from top shoe and retail brands indicated a desire to lean into more deal-making in the near future.
“In terms of acquisitions, we’re always going to keep our eyes and ears open, and we’ll be opportunistic,” Steve Madden chairman and CEO Edward Rosenfeld said in an early May call with analysts. He was responding to an analyst question about what other deals might be attractive to the brand following its $52 million acquisition of Almost Famous in October. Shoe Carnival, which completed its $45 million acquisition of Rogan’s Shoes in February, also indicated last month that it could be open to another deal in the future as it looks to grow its fleet to more than 500 stores by 2028.
And on the sell side, VF Corp. recently completed a strategic review of its portfolio, which includes Vans, Timberland, Supreme and The North Face, and said it would update analysts and investors on its progress soon.
The ability to get deals done, in part, depends on the robustness of the IPO market, which has been relatively slow thus far this year. Just this week, Golden Goose said it would table its efforts to go public “as a result of European market volatility.” The company added that the IPO will be “reassessed in due course.”
