Apparel, Footwear & Accessories Market Update – December 2024

Sector M&A Remains Resilient, Live Commerce Offers Evolution of Selling in the U.S. Apparel and Footwear Market

The Apparel and Footwear market has shown resilience from both a consumer spending and a merger and acquisition (M&A) standpoint through year to date (YTD). Women’s products have been a highlight for the sector, with this category seeing robust spending growth through Q3 2024. Businesses serving this end market have received healthy acquisition interest to date. Sector participants have also explored alternative sales channels, with live commerce emerging as an attractive sales innovation moving into 2025. Capstone anticipates these two interconnected themes will offer ample opportunity for Apparel, Footwear, & Accessories sector players to grow in the new year and beyond, as additional interest rate cuts fuel consumer spending and support a broader M&A market recovery.

The Apparel M&A market is building solid momentum as we head into 2025. The consumer has proven to be resilient despite all the challenge they have faced—including inflation, geopolitical uncertainty, and a weakening jobs market. Operators that have embraced alternative sales channels, such as live selling and other forms of social selling, continue to fare well in this environment. We expect there to be growing investor interest in the sector from both strategics and private equity groups in 2025.

Jesse BetznerSenior Director, Capstone Partners

Women’s Apparel Buoys Sector Sales Growth

Women’s Apparel has emerged as one of the more resilient categories in the Apparel, Footwear, & Accessories sector in YTD. Spending on Women’s and Girls’ Clothing increased 3.2% year-over-year (YOY) in Q3 2024, according to the Bureau of Economic Analysis.¹ This outpaced the broader Clothing & Footwear and Goods categories, which grew 2.5% and 2% YOY, respectively. Healthy demand stemming from this demographic has coincided with increased competition from retailers, particularly with the rise of online brands over the past decade. The number of online women’s clothing businesses has grown at a compound annual growth rate (CAGR) of 10.1% since 2011, and saturation is expected to continue at a 5.8% CAGR through 2029, according to IBISWorld.² Market share concentration has remained low, with most online retailers lacking significant economies of scale. These market dynamics have opened robust opportunities for consolidation, buoying an active corner of the Apparel, Footwear, & Accessories M&A market. Companies have leveraged acquisitions to bolster brand reach and implement best practices from acquired targets with unique customer touchpoints. Small private business owners with strong live streaming engagement are likely to be attractive acquisition targets moving into 2025.

Live Commerce Gains Significant Interest from Sector Participants

Live selling, though not incredibly new, has gained traction recently as social media platforms have become popular destinations for online shopping. Notably, Amazon (Nasdaq:AMZN) launched its Amazon Live feature in 2019 and has continued to invest in the resource. In April 2024, the firm announced that its live commerce platform would appear on its livestreaming service, Prime Video, as an ad-free 24/7 channel and feature live streams from creators and celebrities. Amazon reported that more than one billion customers in the U.S. and India streamed Amazon Live’s shoppable videos in 2023, according to TechCrunch.³ The growing interest in a digital, live shopping experience has reverberated throughout the Apparel, Footwear, & Accessories sector. “We know there’s opportunities for us to open more stores, to get our brand in front of more people. There’s also incredibly exciting channels that are burgeoning in that market that you don’t see anywhere else. I don’t know if anybody’s had the benefit of seeing a live streaming session in China, but it’s an incredibly innovative social media plus QVC model that is working really, really well and growing really, really fast,” said John Vandemore, CFO of Skechers (NYSE:SKX), during the UBS Global Consumer and Retail Conference in March 2024.⁴ Public sector participants will likely continue to explore live commerce implementations in the coming years. This sentiment is expected to drive the Live Commerce Global market’s CAGR of 32% between 2024 and 2030, according to Grand View Research.⁵

Live selling has gained significant interest and demanded high projected growth figures. This has largely been driven by the real-time format, which has helped companies move inventory quickly, leveraging live markdowns to offload overstocked items before inventory management becomes a prolonged headwind to performance. Live commerce can also boost conversion rates by up to 10 times compared to conventional e-commerce, according to McKinsey.⁶ Brands using this channel have opened a lucrative opportunity to cross-sell products, with the largest share (44%) of U.S. consumers purchasing three to four products per show in the Clothes, Shoes, and Accessories categories. Live interaction can provide rich first-party data and enhance the connection with consumers, enabling brands to accurately anticipate trends. Despite the unique advantages to operating a live commerce stream, the model remains in its infancy and widespread adoption has yet to be realized.

U.S. Live Commerce Market Remains Underpenetrated, Differentiator for Women’s End Market

There remains ample runway for U.S.-based brands in the Apparel, Footwear, & Accessories sector to launch live streaming sales channels. China has grown the most mature market for live commerce, with 57% of customers using the shopping format for more than three years, according to McKinsey. Meanwhile, 5-7% of live commerce consumers in Europe, Latin America, and the U.S. have used the platform for more than three years. Although men make up the majority (59%) of users in the U.S., participation rates in China have indicated ample whitespace for companies in the U.S. to target women, further compounding the growth potential for U.S. sector participants operating in this category. Capstone expects live commerce-focused businesses to attract significant M&A appetite, with these companies commanding premium valuations due to the inventory management and first-party data benefits.

Apparel, Footwear, & Accessories M&A Accelerates, Private Buyers Pursue Consolidation

M&A activity in the Apparel, Footwear, & Accessories market has continued its positive momentum through YTD. Deal volume has risen 32.5% YOY to 151 transactions announced or closed YTD. Private buyers have facilitated the majority (59.6%) of sector dealmaking to date, accounting for 90 transactions. These buyers have exhibited a heightened appetite for consolidation, exemplified by a 32.4% YOY increase in deal volume. Private business owners have acquired competitors, accessed new products and services, and gained exposure to new markets and customers through M&A to combat heightened competition in the sector and a more cautious consumer. Public players have also pursued M&A in the current environment, with deal volume among public strategics rising 21.1% YOY to 23 transactions. Notable transactions have included Watches of Switzerland Group’s (LSE:WOSG) acquisition of Hodinkee (October 2024, Undisclosed), Under Armour’s (NYSE:UAA) acquisition of UNLESS Collective (August 2024, Undisclosed), and EssilorLuxottica Societe’s (ENXTPA:EL) acquisition of Supreme from V.F. Corporation (NYSE:VFC) (July 2024, $1.5 Billion, 2.8x EV/Revenue).

Private equity firms have returned to the sector after a lull in sponsor dealmaking in 2023. While add-on activity has remained muted with 15 transactions in YTD compared to 17 in the prior year period, platform deals have risen significantly. Fund managers have made 23 platform investments to date, marking a 130% YOY increase. Spread compression in the Leveraged Loan market from bank and non-lenders has enabled private equity to front-run the Federal Reserve’s September and November interest rate cuts and re-engage in buyouts through YTD. Private equity activity is expected to continue at a healthy pace into 2025 as further interest rate cuts enable cheaper deal financing, fund managers pursue exists for a backlog of portfolio companies, and macroeconomic pressures continue to ease and support robust consumer spending.

Scale and Diversification Headline Sector Deal Rationale

Sector participants have continued to focus acquisition efforts on product and footprint expansion, as well as end market exposure. For small private businesses, these transaction characteristics have helped firms gain meaningful scale and achieve next level growth while macroeconomic headwinds have challenged organic growth. Larger companies have strengthened their brand by diversifying their customer base and opening cross-sell opportunities through horizontal integrations. Select apparel, footwear, and accessories acquisitions are outlined below.

• Janie and Jack Acquires HATCH Collection (October 2024, Undisclosed) – Go Global Retail-backed premium maternity fashion brand Janie and Jack acquired HATCH Collection for an undisclosed sum (October). HATCH Collection is a maternity brand offering fashion beauty and wellness products, as well as educational content and community connection through its editorial platform, Babe. HATCH retails its products through its e-commerce platform and two retail stores, and wholesales through more than 200 retail partners, according to a press release.⁷ Janie and Jack operates 120 retail locations selling apparel, footwear, and accessories alongside its online platform. “By bringing HATCH into the Janie and Jack family, we are extending our reach to the earliest stages of parenthood, cultivating deeper customer loyalty and lifetime value. This acquisition strengthens our position to capture the growing demand in this segment while elevating both brands,” said Mo Beig, President and CFO of Janie and Jack, in the press release.
• EssilorLuxottica Societe anonyme Acquires Supreme (October 2024, $1.5 Billion, 2.8x EV/Revenue) – EssilorLuxottica acquired branded lifestyle apparel, footwear, and accessories company Supreme from V.F. Corporation for $1.5 billion, equivalent to 2.8x EV/Revenue (October). EssilorLuxottica sells eyewear under its portfolio of brands, which includes Ray-Ban and Oakley, via its Professional Solutions and Direct-to-Consumer business units. The acquisition expands EssilorLuxottica’s exposure to apparel and helps the firm address a younger consumer. Moreover, the deal is expected to be margin accretive. “[Supreme] is really a leading iconic brand, the most authentic and desired brand for the new generations. Fully Direct-to-Consumer, with an aura of exclusivity and scarcity around this product offering, often release in limited units. Such a community is loyal to the brand, thus offering EssilorLuxottica an access to an audience that is untapped by its current brand portfolio. Well beyond this strong position in apparel, we are acquiring a unique communication platform to address young consumer,” said Francesco Milleri, CEO of EssilorLuxottica, in its 1H 2024 earnings call.⁸
• Randa Apparel & Accessories Acquires XIX Palms (August 2024, Undisclosed) – Randa Apparel & Accessories acquired XIX Palms, a women’s clothing brand, for an undisclosed sum in August. Randa Apparel & Accessories produces and sells products under 30 brands and licenses, including Levi’s, Tommy Hilfiger, and Columbia Sportswear. The acquired company will operate under the company’s Tribal Sportswear team, building on a licensing relationship started a year ago. Randa pursued the acquisition to expand its market position in women’s accessories. “We are the market leader in men’s accessories…We are now becoming a market leader in the women’s accessories business…But to continue to grow, Randa needs to add new classifications and distribution channels to attract different consumers. And XIX Palms fits the bill,” said David Katz, CMO of Randa, in a press release.⁹ Randa reported having robust dry powder available for more large acquisitions.
• FullBeauty Brands Acquires Avenue (July 2024, $12 Million) – Apax Partners-backed FullBeauty Brands acquired size-inclusive women’s apparel retailer Avenue Online in June for an enterprise value of $12 million. FullBeauty, operating as a digital mall for plus-sized clothing, has exhibited an aggressive M&A strategy, with the Avenue acquisition marking its fourth transaction since April 2023. The firm has purchased inclusive fashion marketplace and personal styling service Dia (April 2024, undisclosed), size-inclusive intimates brand CUUP (July 2023, undisclosed), and ELOQUII (April 2023, undisclosed), a size-inclusive apparel brand. FullBeauty expects the deal will bolster its position in the Women’s Plus-Sized sector, which is valued at $81 billion and growing at three times the rate of the broader Women’s Apparel market, according to a press release.¹⁰“Avenue is a unique opportunity for us to expand our offerings to our classic digital mall customers. Avenue is a well-known plus-sized brand with solid, unaided awareness amongst our boomer demographic,” said Jim Fogarty, CEO of FullBeauty, in the press release.

The Apparel, Footwear, & Accessories market has continued to see substantial M&A opportunities, driven by companies looking for growth catalysts and the changing landscape of sales channels. Consumer spending, though under pressure through much of 2024, has not deteriorated significantly and is expected to rebound moving into 2025 as additional interest rate cuts support company expansion and relieve pressure on consumer debt. Capstone anticipates the Apparel and Footwear market will continue its positive momentum in the next year alongside a broader market recovery.

To discuss the potential impacts of live commerce, provide an update on your business, or learn about Capstone's wide range of advisory services and Apparel and Footwear market knowledge, please contact us.

Andrew Woolston, Associate, was the lead Market Intelligence contributor to this article.

Endnotes

1. Bureau of Economic Analysis, “Table 2.4.5. Personal Consumption Expenditures by Type of Product,” https://apps.bea.gov/iTable/?reqid=19&step=2&isuri=1&categories=survey&_gl=1*2hlpog*_ga*MTE1NTQ4NTU3NC4xNzE2MzA0ODk4*_ga_J4698JNNFT*MTczMDIyNDM5My4zMS4xLjE3MzAyMjQ0MjMuMzAuMC4w#eyJhcHBpZCI6MTksInN0ZXBzIjpbMSwyLDNdLCJkYXRhIjpbWyJjYXRlZ29yaWVzIiwiU3VydmV5Il0sWyJOSVBBX1RhYmxlX0xpc3QiLCI3MCJdXX0=, accessed November 7, 2024.

2. IBIS World, “Online Women’s Clothing Sales in the U.S.,” https://my.ibisworld.com/us/en/industry-specialized/OD5097/performance, accessed October 29, 2024.

3. TechCrunch, “Amazon Brings its ‘Amazon Live’ Shoppable Livestreams to Prime Video and Freevee,” https://techcrunch.com/2024/04/16/amazon-brings-its-amazon-live-shoppable-video-to-prime-video-and-freevee/, accessed October 29, 2024.

4. Skechers, “UBS Global Consumer and Retail Conference,” https://investors.skechers.com/events-presentations/events/detail/3541/ubs-global-consumer-and-retail-conference, accessed October 29, 2024.

5. Grand View Research, “Live Commerce Market Size, Share and Trends Report, 2030,” https://www.grandviewresearch.com/industry-analysis/live-commerce-market-report, accessed October 29, 2024.

6. McKinsey, “Ready for Prime Time? The State of Live Commerce.” https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/ready-for-prime-time-the-state-of-live-commerce, accessed October 29, 2024.

7. PR Newswire, “Go Global Retail and Janie and Jack to Acquire HATCH Collection, a Leading Premium Maternity Brand,” https://www.prnewswire.com/news-releases/go-global-retail-and-janie-and-jack-to-acquire-hatch-collection-a-leading-premium-maternity-brand-302272320.html, accessed October 29, 2024.

8. EssilorLuxottica, “25 July 2024 – 1H 2024 Results,” https://streamstudio.world-television.com/CCUIv3/registration.aspx?ticket=1217-2090-40180&target=en-default-&status=ondemand&browser=ns-0-1-0-0-0, accessed October 29, 2024.

9. Yahoo Finance, “EXCLUSIVE: Randa Apparel & Accessories Acquires XIX Palms Women’s Brand,” https://finance.yahoo.com/news/exclusive-randa-acquires-xix-palms-050000451.html, accessed October 29, 2024.

10. FullBeauty Brands, “FullBeauty Brands to Acquire Affordable Plus Size Specialty Retailer Avenue,” https://www.fbbrands.com/fullbeauty-brands-to-acquire-affordable-plus-size-specialty-retailer-avenue/, accessed October 29, 2024.