Acquisitions Of Sports Apparel And Activewear Driving Valuations Through The Roof
- Brainz Magazine
- May 4, 2022
- 4 min read
Updated: Jun 24, 2024
Written by: Dennis O'Neill, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
The apparel and footwear market is teeming with high-profile acquisitions, thanks to legacy brands looking to expand their reach into fast-growing markets. The already lucrative category is well on its way to accounting for $547 bn globally by 2024.
The pace of mergers & acquisitions picked up in 2021 after a pandemic-restrained year in 2020. Among the major brands and stores that found new owners were Beyond Yoga, DTLR Villa, Eddie Bauer, Hey Dude, Imperial Headwear, JackRabbit, Neptune Mountaineering, Osprey, Reebok, Spanx, Sportsman’s Guide, Sweaty Betty, TaylorMade, and WSS
With the M&A market heating up, there are certain key factors that make a deal worthwhile. According to experts and analysts, is situated in a fast-growing category, such as activewear and athleisure, which is a green flag to a larger company looking to expand its portfolio.
According to a July 30 report from The NPD Group Inc., activewear sales increased more than 40% in the first half of 2021 compared with last year, and more than 25% compared to 2019.
“It is clear that activewear is the key apparel story in 2021,” said Matt Powell senior sports industry adviser for NPD. He also noted that the top-performing active brands are the ones that have focused mostly on female consumers, a major sector of opportunity for brands looking to grow.
In the case of Wolverine, acquiring Sweaty Betty gave the shoe giant a stake in the fast-growing and competitive women’s activewear category, which is led by high-growth brands like Lululemon.
In a recently published Similarweb report, the 25 fastest-growing activewear brands according to web traffic included many smaller and women-focused brands such as Modli and Halara. At the same time, legacy brands Teva, Speedo, and Skechers were also represented.
“The focus on health and wellness is here to stay,” said BMO Capital Markets Analyst Simeon Siegel. “As such, it’s fair to assume brands that resonate strongly with their customers will continue to grow, whether as a standalone and as an acquisition target for a larger company looking to capitalize on the structural shift to active.”
He added that brand acquisitions can either help companies enter the “athletic conversation” or can bolster an existing presence in the market with new products, as was the case with Lululemon’s acquisition of Mirror.
Beyond being situated in the activewear market, brands with strong digital capabilities and existing infrastructure are more likely to be targets for larger brands, experts said.
“Outside of accessing funds and assets, acquisitions could help companies acquire relevant capabilities such as skillsets/knowledge, wider customer segments, proprietary designs or processes versus starting from scratch,” said Liza Amlani principal and founder of Retail Strategy Group, a consulting company for retailers. “In some cases, merging with another brand could increase a brand’s market share and cut out some of the competition.”
Amlani added that smaller brands with inclusive offerings for all sizes can also entice larger brands looking to penetrate these categories.
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Dennis O'Neill, Executive Contributor Brainz Magazine
Dennis O'Neill is currently the President and board member of Biomedican, Bio-Kai and ActinexRX . He has over 30 years experience as an Investment Banker. He helped start two of the largest regional Investments banks in Chicago then went on to Managing Director for Softbank Investments/ E2Capital office in Chicago and raised over 2 billion dollars in capital for early stage companies to date. Mr. O'Neill has a significant amount of experience and success in Sales, Marketing, Financial Media, Business Development and Institutional Capital Raises. He is an expert and thought leader on Venture Capital, Private Equity, Biotech, Cannabis Therapeutics, Blockchain and Smallcap stocks and has spoken at over 75 conferences around the world.
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