Private credit could fuel bargain M&A deals as luxury fashion empires shed brands: Euan Rellie quoted in Octus

Euan Rellie, Managing Partner and Chairman of Consumer & Retail, BDA Partners, was recently quoted by Octus on the current state of M&A activity in the luxury fashion market.

“Buyers are paying for a profit stream that is subdued at the moment,” said Euan Rellie. “Because of the down market, there is opportunistic M&A at lower price points, which you could ironically call bargain shopping.”

When reflecting on today’s buyer-friendly M&A environment, some sources evoked memories of the 2008 great financial crisis, surmising that deals struck in that period realized some of the healthiest returns of the last decade.

“Private equity activity during the GFC was rewarded with some of the best-performing exits five years later,” purports Rellie. “It’s a buyer’s market and sellers will need to be realistic in price. But we think this is a great time to buy – and the trade war won’t last forever.”

Rellie noted that billion-dollar M&A deals in the luxury sector have been abnormally subdued over the past several years. In a pre-pandemic landscape, there were typically two to three such deals every year originating in either Europe or the United States.

However, the recent tariff hikes cast a bright light on underperforming brands that drag on portfolios, which could put pressure on strategics to begin divestitures, Rellie said.

Likely targets:

• Ami Paris – Sequoia Capital China acquired the French designer brand in 2021, and recent reports note the company is looking for a buyer. It was first founded by designer Alexandre Mattiussi in 2011.
• Brunello Cucinelli – Italy-based Brunello Cucinelli SpA pursued an IPO in late 2023 on the Euronext Milan stock exchange under the ticker BC.MI. Its consistent performance and vertical integration has garnered attention as a valuable acquisition target, despite Cucinelli voicing a preference for independence. As of June 4, the company was trading at €106.20.
• Burberry – Spurred by performance challenges, the company was rumored last year to be targeted by luxury brand Moncler for an acquisition, though the rumors were ultimately debunked. Burberry Group plc trades on the London Stock Exchange under the ticker BRBY.L and as of June 4 was trading at £10.93 per share.
• Dolce & Gabbana – Co-founders Domenico Dolce and Stefano Gabbana are 67 and 62 years old, respectively, and have no successors in the ownership lineup. Last year, the pair told the media the company would prefer a minority investor rather than an IPO.
• Giorgio Armani – Infamous founder and designer Giorgio Armani, who turns 91 in July, told the media in 2024 that he plans to retire in the next “two or three years.”
• Guess? Inc. – In March, publicly listed Guess? Inc., which trades on the NYSE under the ticker GES, announced it received a nonbinding acquisition offer from WHP Global for $13 per share. However, no deal was announced. As of June 4, GES was trading at $11.07 per share, down from $23.06 on June 4, 2024.
• Jimmy Choo – Carpi Holdings acquired the luxury shoe designer in 2017 from Labelux, a division of JAB Holdings. In March, Capri sold Versace to Prada, and Jimmy Choo is widely reported to be next on the chopping block.
• Only The Brave – Diesel founder Renzo Rosso, owner of the Italian holding company OTB Group, told media in 2024 that IPO plans have been postponed until 2026. In addition to Diesel, OTB owns fashion brands Maison Margiela, Marni, Jil Sander and Viktor & Rolf.
• The Row – Founded by celebrity sisters Ashley and Mary-Kate Olsen in 2006, the company reportedly received investments last year from family offices affiliated with Chanel and L’Oréal, valuing The Row at about $1 billion.
• Valentino – Founded in 1960 by Valentino Garavani, luxury strategic Kering (in partnership with Qatari investment fund Mayhoola) acquired a 30% stake in the company in 2023 for a cash consideration of €1.7 billion. In the announcement, Kering notes it has the option to acquire 100% of Valentino no later than 2028.