The footwear deal market got off to a slower start than expected in 2024. But in the last few weeks, shoe executives have indicated that they are leaning towards new deals in the near future, which could help catalyze the consumer M&A market.
“In terms of acquisitions, we’re always going to keep our eyes and ears open, and we’ll be opportunistic,” Steve Madden chairman and chief executive officer Edward Rosenfeld said in an early May call with investors. 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. In its first quarter, Steve Madden said the Almost Famous apparel business contributed $41 million in revenue and will be used to help the brand grow its own Madden Girl and Madden NYC apparel businesses.
“If we find another brand that adds to the portfolio, that’s complementary to what we do and where we can add value and make a difference, that’s certainly something we would look at,” Rosenfeld said.
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Steve Madden wasn’t the only company that seemed open to new targets. Shoe Carnival, which completed its $45 million acquisition of Rogan’s Shoes in February, also indicated this week 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. Chief executive Mark Worden said in a call with analysts this week that “profitable M&A activity” is a core part of the chain’s growth strategy. (Shoe Carnival also acquired Shoe Station in late 2021.)
“Going forward, we are well positioned to continue pursuing M&A as part of our growth strategy,” Worden said. “Our balance sheet is strong, and we have zero debt. We have the flexibility to consider using equity or modest debt to the appropriate M&A opportunity. But given our solid cash position, funding M&A with cash flow from operations has been our approach just as we did with Shoe Station and Rogan’s.”
On the sell side, VF Corp. this week said it completed a strategic review of its portfolio, which includes Vans, Timberland, Supreme and The North Face, and that it would update analysts and investors on its progress soon.
Macy’s chief financial officer Adrian Mitchell also spoke positively about the deal-market this week when he described the retailer’s progress in monetizing its assets. Macy’s in March said it would close several distribution centers and “monetize select assets” likely via a sale or sublease process. Mitchell told analysts on Tuesday that the company is “certainly encouraged by the deal-making activity that we’ve been seeing.”
“Our focus is very much on quality deals, finding the right buyers and making sure that we’re getting the right price,” Mitchell said.
Moving forward, the ability to get deals will largely depend on the robustness of the IPO market and a cooperating economy and interest rates. With the exception of Amer Sports‘ IPO in February, the shoe IPO market has been quiet since Birkenstock’s October IPO last year (though Golden Goose is rumored to be working towards a public debut). But that could change in the back half of 2024.
According to PwC’s 2024 consumer M&A outlook, there will likely be more fashion transactions throughout 2024 as brand owners look to review their portfolios and change their structures.
“With consumer discretionary spending likely to remain challenged and elevated levels of distress likely to persist, the fashion market in 2024 will be increasingly polarized between winners and losers,” read the January report from PwC, authored by Hervé Roesch, PwC UK’s global consumer markets deals leader and partner. “We expect successful companies to leverage their balance sheets and operating platforms to pick up valuable brands.”
