The Most Popular Brand In Fashion Industry

So and so brand to change

Rumors

There is no shortage of circles.

But there is another rumor that leads the headlines: facing the slowing market, the largest number of Companies in the industry are turning to mergers and acquisitions for expansion, whether Burberry refuses to buy a lot of negotiations or Lu Wei Xuan group.

Denying that it has acquired Supreme, Coach's pursuit of the acquisition of Kate Spade is also rampant.

According to the world clothing and shoe net, the largest enterprise group in the luxury industry is most likely to promote growth through mergers and acquisitions.

"The most active companies in the field of mergers and acquisitions are, of course, luxury goods groups," said Mario Ortelli, senior analyst at Sanford C.Bernstein. "These groups have already created a capital expenditure cycle and have been doing business iteration globally, so they can not invest too much in organic growth." Sanford Bernstein said.

Last year, Ortelli told BoF that both Richemont and Lu Wei Ming Xuan had the ability to buy over 10 billion euros worth.

Coach is also very active in merger and acquisition. After acquiring Stuart Weitzman in January 2015, it hopes to build itself into an American multi brand fashion enterprise group.

Victor Luis, chief executive of Coach, once said: "we believe that Coach Inc. is bigger than Coach brand.

Our priority is to build a great brand with the expertise of the Coach brand, and Coach is particularly good at developing brands internationally and domestically. "

Luca Solca, director of luxury business at Exane BNP Paribas, Paris, said: "Coach's market competitors are starting to invest in mergers and acquisitions, perhaps because they think their core businesses are mature.

M & A has become one of the ways to allow free cash flow to start functioning and to increase average growth. "

Generally speaking, M & A is mainly a large scale, better financing enterprise buying high potential brand holding power, and using its deep capital, international operation expertise and existing support network to accelerate its development.

But buyers must be very careful to avoid damage to existing businesses. Timing determines everything.

In fact, the most attractive takeover targets are brands that are traditionally at the stage of development and no longer need to invest heavily in brand positioning and customer acquisition, and prices are still attractive.

Ortelli said, "but for today's market, acquiring more practical things is more attractive than buying only brand names."

"Brands will decline and die, but if companies can build such platforms to extract meaningful cost synergies from additional targets, then they will be able to open up growth paths, whether their handbags can hit the trend cycle just now," added Stephen Boyd, founder of hedge fund Armistice Capital. "When it comes to what a good M & a goal is, there is a gap between its distribution and significant cost savings, which will be far more than imagination."

In the rapidly changing world, mergers and acquisitions can also provide buyers with opportunities to quickly open new consumer demands that their businesses fail to meet.

For example, Lu Wei Ming Xuan bought the high-end German luggage maker Rimowa last year, and the recent minority flavor brand Francois Francis Kurkdjian.

The two can complement the existing assets of the group and get the group positioning of the expanding fast growth category.

Are there any categories of sports clothes that can be applied? "There are two major fashion trends: one is clothing leisure, the other is sportswear.

So for large groups, any company that can establish a symbolic position in these two trends will be an interesting takeover target, "Ortelli said.

So, what companies have become the biggest competitors in the fashion industry? BoF conducted internal research and analysis, and exchanged with many industry experts to identify the following ten major targets for fashion acquisitions.

Acne Studios - founded in 1997 - revenue of $215 million

The brand comes from Stockholm, has a strong brand logo, and integrates Scandinavia style with fresh Street aesthetics.

Acne's products are priced less than traditional luxury brands, providing the luxury group with the opportunity to tap new markets outside the core business.

Although Acne Studio sold its minority stake in 2006, the brand retail expansion is completely organic, which is impressive only through cash flow from business.

At present, the brand is mainly in the main department stores worldwide, and the retail network includes 50 stores operated in 13 countries.

But in the last fiscal year, Acne's brand revenue was only below 200 million euros, which belongs to small businesses with high growth potential.

Burberry - founded in 1907 - revenue 2 billion 510 million

Although the leadership is unstable and the market demand for products is getting colder, Burberry's skill level in the digital field has made it still an interesting acquisition target for Lu Wei Ming Xuan, because in this field, Lu Wei Hin is still lagging behind, and still striving to catch up with the measures such as the appointment of former Apple high level Ian Rogers as the chief digital officer.

In addition, in view of the lack of other British luxury brands, Burberry's British lineage is still a unique brand positioning and will get a higher premium.

Rumours about Burberry or the potential acquisition target of the former C line and Givenchy's Marco Gobbetti joined the Burberry as the chief executive.

In addition, Bernard Arnault long term business assistant Albert Fr Fr re, an independent director of the group, chairman and chief executive of Lu Wei Xuan group, has acquired 3% of the shares of Burberry through Groupe Bruxelles Lambert SA investment company to further expand the dialogue process between the two companies.

Finally, there are reports related to Coach and Burberry, which first appeared in newspapers in October 2016.

Luca Solca told BoF at the time: "if Coach and Burberry are to be merged, it is only a combination of the two issues.

Looking at the history of mergers and acquisitions of luxury goods, mergers will not help brands restore their attractiveness and aspirations. In the face of insufficient brand motivation, they want to increase their cost efficiency.

So this possibility may have been ruled out.

Canada Goose - founded in 1957 - revenue of $219 million

According to Bloomberg s's Alex Barinka, although the Canadian coat brand was listed in the initial public offering in March 2017, its valuation was about $2 billion, and its share price rose by nearly 40%. Its expansion is still relatively young.

The company has successfully created evergreen fashion products, coyote fur Parker windbreaker, and has established strong attraction in media, opinion leaders and consumers.

Indeed, investors and analysts are full of confidence in the high growth potential of the brand in strong performance figures.

According to its listing, Canada Goose created 290 million 800 thousand Canadian revenue in the fiscal year of March 31, 2016, with an annual growth rate of 38% in the past 3 years (CAGR), and a net income of 26 million 500 thousand in the last fiscal year, with a growth rate of 196% in the same period.

{page_break}

Today, Canada Goose has been listed, and its original private investor Bain Capital has completely retired. In theory, it is easier for luxury group to issue an active takeover offer and buy heavily into the next stage of development.

The question is whether big groups are willing to take a premium above the price of the brand to buy Canada Goose shareholders to sell their shares.

Kate Spade - founded in 1993 - revenue of $1 billion 400 million

Structurally speaking, Kate Spade can bring obvious synergy effect to Coach and other companies. Many analysts believe that Coach will soon hear the news of the acquisition of the brand.

In 2016, the net sales of Kate Spade amounted to $1 billion 400 million, and the adjusted profit and loss before depreciation and amortization (EBITDA) amounted to US $259 million.

Combined with shipping channel and material purchase orders or increasing profit margins, the company will re adjust its Coach retail outlets with poor performance, support Kate Spade's international retail expansion and cut costs.

Part of the reason why Kate Spade is located in the United States is mainly because it is an American brand.

At present, sales of Kate Spade 80% are from the United States.

Therefore, if future buyers can have infrastructure and expertise in China and other parts of the world like Coach, Kate Spade can start selling immediately if it is inserted into the existing platform, "Boyd said.

However, the most attractive factor in efficiency and cost savings is probably that the two business headquarters are located in New York, which is more likely to have synergistic effects on general and administrative expenses.

Analysts said that Michael Kors, the most likely to join the Coach competition, still had the opportunity to acquire Kate Spade with its shares, but what they all looked forward to was the success of the Coach merger.

Lululemon - founded in 1998 - revenue of $2 billion 300 million

For all the people who are interested in the booming sportswear market, Lululemon can not afford to miss such a single market player.

Despite the recent poor performance of the brand, buyers with strong high-end brands and qualifications in the international market with insufficient penetration (especially in the Chinese market experiencing the rise of sportswear) will experience the value of acquiring the company at attractive prices.

In 2015, Nike and Under Armour became potential buyers.

Lululemon first explored the trend of influence of popular fitness activities such as yoga and Pilates on lifestyle.

But despite the rapid growth of its brand, its performance has been unstable, with a sharp decline in revenue in recent years.

In March, Lululemon's share price plunged nearly 23%.

Patagonia - founded in 1973 - projected Revenue: $700 million

In addition to incorporating sustainable development practices into the business "decades of growth potential", the brand can also bring rich expertise to large business groups in the field of sustainable development.

Rose, chief executive of Patagonia, said: "the planet we live in is less and less abundant, and a lot of raw materials are not always available."

So you must start trying to figure out how to solve these problems now.

As a Private Companies in the principle of circular economy, Patagonia is not an obvious purchase target. It is not easy to persuade company owners to sell abroad.

But because of its positioning in the field of environmental protection luxury goods, it has become an attractive target in the eyes of analysts.

In addition, with the current market's preference for sportswear and the trend of environmentallism and consumerism, the appeal of the brand has gone beyond fashion.

Puma - founded in 1948 - Revenue: 1 billion euros

Kering is not only a potential buyer, but also a potential seller.

Francois Henri Pinault, chairman of Kai Yun, decided in April 12, 2017 to withdraw from the Puma board to further strengthen the market's speculation about the upcoming sale of Puma.

Solca described the brand as "a brighter track" in December 2016. Its first quarter results in 2017 showed an 15% year-on-year growth of 1 billion euros.

Because of this, Puma has increased its forecast for 2017 earnings, and its share price has risen by more than 5%, reaching its highest level in nearly 10 years.

Although the acquisition of Puma before the opening of cloud is considered to be the start of the new generation of lifestyle brand strategy, Solca said: "however, the synergy between Puma and Kai Yun's luxury brand portfolio is never expected."

Since its acquisition, Kai Yun has introduced star Rihanna (Rihanna) as its Fenty designer in the form of hiring new management teams, buying licenses and improving distribution.

Potential buyers may be interested in acquiring new brands at the very beginning.

Salvatore Ferragamo - founded in 1927 - Euro 710 million euro

As one of the few great Italy family businesses that are not controlled by the world's three largest luxury conglomerates, Salvatore Ferregamo is a rare business opportunity for Kai Yun or Lu Wei Ming Xuan: increasing the number of shoes in the field and not making its existing fashion and leather products business in a difficult position.

There will also be important synergies in distribution, material procurement, and even manufacturing.

The Ferragamo brand itself also provides a very strong foundation for growth.

Luca Solca has summed up in the article "why sleeping beauty" Salvatore Ferragamo is about to wake up. "In China, the brand enjoys popularity and desire; in France, it is one of the three most popular brands in the market; in the US, the product is eager to surpass other competitors."

Solca also analyzed the brand development strategy in February this year, and wrote: "the platform of the company is very strong, but we need to work hard to narrow the gap between the industry leader in brand awareness and desire."

As the brand sales growth has slowed down since 2015, who can give guidance to Ferragamo in addition to the industry giants?

Supreme - founded in 1994 - expected revenue unknown

In January, Kim Jones unveiled Louis Vuitton X Supreme in Paris men's wear Week fashion flyover. More media speculated about the French fashion house's acquisition of the latter.

If it is not part of a bigger deal, why do the two companies that have such a valuable brand suddenly agree to cooperate so closely? Or, at least, it is a sight that people love to see.

Despite the fact that Lu Wei Ming Xuan denied that she was buying Supreme, Supreme, known as the "Chanel of the street wave brand", is clearly a good target for M & A.

The brand has only 10 stores in North America, Asia and Europe, and there is no wholesale business other than Dover Street Market.

Although global expansion poses a certain challenge to the existence of Supreme brand (how the brand continues to expand, but does not dilute the local manufacturing of the minority worship aura), Supreme is indeed supreme in terms of its potential goals.

Tiffany - founded in 1837 - revenue of $4 billion

In the report of the Paris banking securities department of France, entitled "a flash in the pan: the rise and fall of American luxury goods" (The Meteoric Rise&Fall of American Luxury), the report referred to Tiffany, saying that its "strong brand equity" and "European luxury business model" were separated from its American fashion and luxury brands after its "stunning fall after a short-lived success", so it can also become the main takeover target of cloud and LVMH.

It is not cheap to buy Tiffany with a market valuation of nearly $7 billion 800 million. Although Tiffany has encountered difficulties in creating value for shareholders in the recent cycle, other valuable business opportunities have yet to be developed, including the development of brand watch products, the separation of silver jewelry and the high-end retail mode.

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