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Apparel Retail - 2019 M&A Summary

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Analysis of recent transactions in Apparel Retail Industry detailing on Transaction Multiples (Revenue & EBITDA), Multiples Chart, Active Buyers & Transaction Data. A goldmine of resource for Entrepreneurs.

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Apparel Retail - 2019 M&A Summary

  1. 1. page A L P S V E N T U R E P A R T N E R S 1 APPAREL ! RETAIL! This report is intended solely for the informational use and is not intended to be and should not be used by any other person or entity. No other person or entity is entitled to rely, in any manner or for any purpose, on this report.
  2. 2. page A L P S V E N T U R E P A R T N E R S 2 M&A Summary – Apparel Retail Valuation Summary Total Deal Value ($mm) 20,126 Average Deal Value ($mm) 292 Average TEV/Revenue 1.2x Average TEV/EBITDA 11.3x Average Day Prior Premium (%) 72% Average Week Prior Premium (%) 74% Average Month Prior Premium (%) 77% *Source: CapitalIQ, AlpsVP Analysis Date Range: Jain 1, 2013 – March 25, 2019 info@alpsvp.com Transaction Ranges Greater than $1 billion 4 $500 - $999.9 mm 3 $100 - $499.9 mm 15 Less than $100 mm 47
  3. 3. page A L P S V E N T U R E P A R T N E R S 3 Transaction Multiples - Trend *Source – CapitalIQ, AlpsVP Analysis 0.8x 1.4x 0.9x 2.0x 0.8x 6.8x 8.3x 6.5x 11.1x 11.7x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 2014 2015 2016 2017 2018 Transaction Multiples Average TEV/Revenue Average TEV/EBITDA Historical Multiples 2014 2015 2016 2017 2018 5 years Average TEV/Revenue 0.8x 1.4x 0.9x 2.0x 0.8x 1.2x Average TEV/EBITDA 6.8x 8.3x 6.5x 11.1x 11.7x 8.9x info@alpsvp.com
  4. 4. page A L P S V E N T U R E P A R T N E R S 4 Transaction Numbers - Trend *Source – CapitalIQ, AlpsVP Analysis 1 3 - - - - 1 - 1 1 - 7 6 - 2 11 11 9 10 6 - 2 4 6 8 10 12 2014 2015 2016 2017 2018 Number of Transactions > $1 billion $500 - $999.9mm $100 - $499.9mm Less than $100mm (in $ Million) 2014 2015 2016 2017 2018 5 years Average Deal Value $175.2 $644.1 $124.5 $82.0 $120.6 $229.3 info@alpsvp.com
  5. 5. page A L P S V E N T U R E P A R T N E R S 5 Geographic Heat Map *Source – CapitalIQ, AlpsVP Analysis; Number of transactions in Major Regions Asia Pacific – 7.7% Americas – 27.0% Europe/MENA/Africa – 65.3% info@alpsvp.com Region / Transactions Number Total Value ($m) Average Size ($m) Asia Pacific 24 $1,549 $65 Europe/MENA/Africa 33 $13,149 $398 Americas 12 $5,428 $452
  6. 6. page A L P S V E N T U R E P A R T N E R S 6 Investment Focus *Source – Data based on transactions during Jan 01, 2013 and March 25, 2019 from CapitalIQ, AlpsVP Analysis info@alpsvp.com Geographic Location Number of Transactions Average Historical Multiples Average Transaction size (USD mn) United States 11 1.3x $487.8 United Kingdom 8 0.9x $556.0 Hong Kong 6 1.9x $116.4 South Africa 6 0.6x $945.6 Australia 5 0.6x $52.2 France 3 1.0x $195.7 Japan 3 0.6x $20.9 South Korea 2 4.0x $6.9 Poland 2 1.6x $7.0 China 2 1.7x $95.1 Germany 2 1.0x $231.6 Belgium 2 1.0x $375.9 India 1 3.2x $110.7 Ireland 1 2.3x $53.1 Malaysia 1 1.6x $3.9 Others 14 0.9x $102.0
  7. 7. page A L P S V E N T U R E P A R T N E R S 7 Largest Transactions Target companies Deal Value ($mm) Pepkor Holdings Proprietary Limited $5,658 New Look Retail Group Limited $3,259 ANN INC. $2,387 Jos. A Bank Clothiers Inc. $1,826 Cortefiel, S.A. S.A. $583 Ikks Group S.A.S. $564 The Finish Line, Inc. $558 Michael Kors (HK) Limited $500 Detlev Louis Motorradvertriebs GmbH $454 Retail Concepts N.V. $449 *Source – CapitalIQ, AlpsVP Analysis info@alpsvp.com
  8. 8. page A L P S V E N T U R E P A R T N E R S 8 IND UST RY INSIG HT S
  9. 9. page A L P S V E N T U R E P A R T N E R S 9 Industry Outlook (1/4) [1] Source: Women Clothing Stores in US published by IBISWorld, May 2019 info@alpsvp.com Women Clothing Stores in US1 The market for the Women’s Clothing Stores industry is changing. Due to declining mall traffic and competition from thriving superstore retailers, industry revenue is expected to fall at an annualized rate of 1.4% to $43.1 billion over the five years to 2019, including a decline of 1.1% in 2019. Despite the industry’s overall decline, rising disposable income and consumer sentiment are expected to boost some specialty and high-end retailers. While price-conscious consumers among lower- to middle-income households are important to industry sales, the willingness of higher-income consumers to spend on luxury clothing and accessories has been the main driver behind growth over the past five years. 31.0% 24.3% 20.6% 15.2% 8.9% Top Other apparel and accessories Bottoms Dresses Outerwear By definition, this industry only accounts for clothing stores that specialize in women’s clothing, which excludes many popular family and unisex retailers that also carry women’s clothing, but usually at lower prices. Therefore, many of the largest industry players are high-end or specialty stores that intend to sell to affluent women or niche markets. Many small specialty stores that carry niche products such as eco-friendly clothing or athleisure wear have flourished while staple mall stores have cut down locations to remain profitable. As a result, the number of industry enterprises has increased at an annualized rate of 1.6% to 38,344 enterprises over the five years to 2019. Additionally, growth in the number of households earning more than $100,000 is expected to have helped several main industry players outperform low-end retailers that have more customers but less- expensive transactions.
  10. 10. page A L P S V E N T U R E P A R T N E R S 10 Industry Outlook (2/4) info@alpsvp.com Women Clothing Stores in US1 Over the five years to 2024, industry revenue is expected to decline at an annualized rate of 0.9% to total $41.2 billion. Industry competition is expected to rise, as more operators enter the industry and internet sales continue to gain an edge in women’s clothing. Many companies that were traditionally store-only businesses have responded to external competition by opening online stores that complement their brick-and-mortar establishments and attracting more customers through social media. The rise of mobile technology is expected to sustain this trend in the future. As consumers experience better financial conditions that favor nonessential purchases, revenue growth for a few existing industry players is expected to continue. 45.3 44.9 44.2 43.6 43.1 42.6 42.4 42.1 41.8 41.2 -2.1% -0.9% -1.4% -1.5% -1.1% -1.1% -0.6% -0.5% -0.9% -1.3% -2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 39 40 41 42 43 44 45 46 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 WomenClothinginUSRevenue($B) Market Size ($B) Growth (%age) [1] Source: Women Clothing Stores in US published by IBISWorld, May 2019
  11. 11. page A L P S V E N T U R E P A R T N E R S 11 Industry Outlook (3/4) [1] Source: Men Clothing Stores in US published by IBISWorld, Dec 2018 info@alpsvp.com Men Clothing Stores in US1 The Men’s Clothing Stores industry began to slowly contract over the five years to 2018, as more male consumers turned to the internet for their clothing needs. As the percentage of services conducted online grew at an annualized rate of 12.8%, demand for the brick and mortar establishments that operate in this industry fell. As a result, IBISWorld estimates that total industry revenue declined at an annualized rate of 1.6% over the five years to 2018, totaling $8.6 billion. In 2018 alone, IBISWorld estimates that industry revenue will contract 1.0%, as e-commerce sales rise a projected 12.8% for the year. 37.9% 19.6% 15.6% 8.0% 7.1% 5.6% 6.2% Casual wear Suits and formal wear Office wear Accessories Sport coats and blazers Overcoats and raincoats Others Despite pressure from online-based retailers, industry demand has been supported by positive macroeconomic conditions. Demand for new men’s apparel is at its highest when employment rates are strong, since men often require new office attire for work. As the national unemployment rate declined at an annualized rate of 12.3% during the five-year period, industry declines were slightly offset. Furthermore, as a result of the high employment rate, disposable income trended upward throughout the period, providing consumers with more available funds to spend on men’s clothing. This also served as a boon to the industry and kept revenue from contracting at a more rapid rate throughout the period. Over the five years to 2023, IBISWorld expects that industry revenue will continue to decline, though at a more rapid rate than the previous period. As the percentage of services conducted online continues to grow, this brick-and- mortar industry will continue to feel pressure from external competitors. Furthermore, macroeconomic variables that supported the industry during the period are expected to turn in the coming years.
  12. 12. page A L P S V E N T U R E P A R T N E R S 12 Industry Outlook (4/4) info@alpsvp.com Men Clothing Stores in US1 Revenue for the Men’s Clothing Stores industry is forecast to contract more rapidly over the five years to 2023, declining at an annualized rate of 2.7% and totaling $7.5 billion. This includes a projected contraction of 2.8% in 2019 alone. The industry will experience a more rapid decline during the outlook period, as economic factors, such as consumer confidence, make downward turns. Furthermore, increased competition from online retailers of men’s clothing and discount stores will continue to pressure industry revenue. However, the upward trajectory of the overall economy and improvements in per capita disposable income will keep the industry from declining more rapidly. 9.3 8.8 8.7 8.6 8.4 7.9 7.8 7.6 7.5 7.4 -1.8% -4.8% -0.9% -1.0% -2.8% -5.5% -2.3% -2.3% -0.7% -1.3% -6.0% -5.0% -4.0% -3.0% -2.0% -1.0% 0.0% 0 1 2 3 4 5 6 7 8 9 10 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 MeClothinginUSRevenue($B) Market Size ($B) Growth (%age) [1] Source: Men Clothing Stores in US published by IBISWorld, Dec 2018
  13. 13. page A L P S V E N T U R E P A R T N E R S 13 Alps Venture Partners has established a team of experts that have experience in valuing businesses across diverse industry sectors and all developmental stages; ranging from clients with seed funding to pre-IPO stage. With the team having experience of both valuations and audits, our detailed and insightful valuation appraisal reports, along with our responsive support, help our clients easily pass through any stringent audit review process in a smooth, efficient and time-bound manner.
  14. 14. page A L P S V E N T U R E P A R T N E R S 14 Corporate Finance Services We provide clients with high quality research, analytical and advisory support for transactions. We offer a range of services such as initial opportunity assessment, market analysis, financial modeling, commercial and financial due diligence, valuation, capital structure planning, and deal structuring. v  Investment Opportunity Assessment v  Target Identification v  Preparation of Pitch Books v  Buyer & Seller Services v  Fairness Opinions v  Financial Modeling v  Business and Financial Due Diligence etc. Transaction advisory Financial Modeling Whether it is evaluating new business ventures, proposed transactions or financial and operational strategies, a robust and dynamic financial model is an integral component to the decision- making process. Transaction Identification We can help by global target identification considering the requirements with maximum synergy. The financial due diligence process is a necessity to any transaction. Our aim is to enable owners and managers to make such investments with confidence by supporting and advising at every stage. We will help reduce the risk – and stress – of investing at home or in another country. Due Diligence Custom Research We provide clients with customized research report, model, decks with client specific requirements such as: v  Business plan development, v  Diagnostic review of operations v  Competitor benchmark analysis v  Intellectual Property info@alpsvp.com
  15. 15. page A L P S V E N T U R E P A R T N E R S 15 Financial Reporting and Tax Compliance Services IRC 409a We have experience of handling more than 2000+ 409a valuations across Industries. With the team having experience of both valuations and audits, our detailed and insightful Section 409A appraisal reports, along with our responsive support, help our clients easily pass through any stringent audit review process in a smooth, efficient and time-bound manner. Fair Value Measurement We help PE and VC clients to comply with ASC 820 and IFRS 13 standard’s complex provisions and avoid any audit issues in their quarterly and annual reporting. Relative TSR Programs We value the awards with Relative TSR metrics, using sophisticated modeling techniques which allow clients to quickly and accurately value new grants. Our business valuation experienced team along with the team of veteran Patent lawyers position us uniquely to assist clients in completing annual Goodwill and Investment Impairment testing. ASC 350 / IAS 38 ASC 718 (FAS 123R)/IFRS 2 Our experienced team at Alps Venture Partners has performed hundreds of stock options valuations for ASC 718 for privately held companies and publicly listed companies across diverse industry sectors and enterprise development stages. ASC 805 / IFRS 3 We have unmatched proficiency in delivering Business Combinations Accounting solutions to clients in v a r i e d i n d u s t r i e s . O u r comprehensive USPAP compliant appraisal reports are auditable and cost-effective, and help our clients stay focused on the deal. IRC 83 B Election Alps Venture Partners has extensive experience in assisting companies seeking to comply with IRC 83 B election. Failing to make a timely 83(b) election may lead to disastrous tax consequences for a start-up company founder or employee. info@alpsvp.com
  16. 16. page A L P S V E N T U R E P A R T N E R S 16 Disclaimer The contents of this presentation are protected by copyright. You may read the contents and make copies for your own personal use. You may also give copies of reasonable extracts, on an occasional basis, free of charge to your contacts for their personal use provided that Alps Venture Partners is acknowledged as the source, the text is not altered in any way, and this warning is brought to their attention. Any other use or copying of the contents of this presentation is prohibited, unless Alps Venture Partners gives its prior written consent. For further information please contact us at info@alpsvp.com Pursuant to Title 17, United States Code, Section 512(c)(2), notifications of claimed copyright infringement under United States copyright law should be sent to Service Provider’s Designated Agent. ALL INQUIRIES NOT RELEVANT TO THE ABOVE PROCEDURE WILL RECEIVE NO RESPONSE. This Agreement (and any further rules, policies, or guidelines incorporated by reference) shall be governed and construed in accordance with the laws of the United States (USA), United Kingdom, Canada, Brazil, France, and India without giving effect to any principles of conflicts of law. Alps Venture Partners welcomes your questions or comments regarding this Statement of Privacy. If you believe that Alps Venture Partners has not adhered to this Statement, please contact Alps Venture Partners at our given toll free contact numbers. Copyright © 2019 ALPS VENTURE PARTNERS. All Rights Reserved

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