- Fashion M&A isn't any easy road in the current retail climate as both large chain store operators and private equity firms eye the space cautiously. The sharp plunge in Abercrombie & Fitch (ANF -4%) over the last two days may be driving that nail home.
- "Perhaps the reason the Abercrombie deal didn’t get done was that they’ve got way too many stores in way too many malls that don’t make any money, and the cost to unwind those pieces and get out of those stores is just too great to compensate for the upside," observes KPMG retail specialist Mark Belford.
- One of the problems for fashion brands looking to sell themselves is that many recent deals (Claire's Stores, J. Crew, Gymboree) haven't worked out for the buyers.
- "Fashion is not something you can solve with math," Belford notes.
- Many apparel store stocks trade without the benefit of a M&A backstop due to the development.
- YTD returns: Stein Mart (NASDAQ:SMRT) -75%, Ascena Retail (NASDAQ:ASNA) -68%, Tailored Brands (NYSE:TLRD) -60%, Stage Stores (NYSE:SSI) -58%, Cherokee (NASDAQ:CHKE) -56%, Boot Barn (NASDAQ:BOOT) -49%, Urban Outfitters (NASDAQ:URBN) -38%, L Brands (NYSE:LB) -33%.
- Previously: No buyout deal for Abercrombie & Fitch (July 10)
- Now read: Tailored Brands - Misunderstood And Grossly Undervalued
Original article