Footwear Executives Signal Willingness to Do More Deals in 2024 – Footwear News

AP

The footwear transaction market in 2024 got off to a slower start than expected. However, over the past few weeks, footwear executives have hinted that they are leaning towards new deals in the near future that could help catalyze the consumer M&A market.

“When it comes to acquisitions, we will always keep our eyes and ears open and act opportunistically,” Steve Madden Chairman and CEO Edward Rosenfeld said on a call with investors in early May. He was responding to an analyst’s question about what other deals might be attractive for the brand following its $52 million acquisition of Almost Famous in October. Steve Madden said the Almost Famous clothing business generated $41 million in revenue in the first quarter and will be used to help the brand grow its own Madden Girl and Madden NYC clothing businesses.

“If we find another brand that complements the portfolio, that complements what we do and where we can add value and make a difference, we will certainly look at it,” Rosenfeld said.

Steve Madden wasn’t the only company that seemed open to new goals. Shoe Carnival, which completed its $45 million acquisition of Rogan’s Shoes in February, also indicated this week that it may be open to another deal in the future as it plans to expand its fleet to more than 500 stores by 2028. Chief Executive Mark Worden said during calling with analysts this week, I concluded that “profitable M&A activity” is a key part of the network’s growth strategy. (Shoe Carnival also acquired Shoe Station in late 2021.)

“Going forward, we are well-positioned to pursue mergers and acquisitions 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 light debt to obtain the right M&A opportunity. However, given our solid financial position, our approach has been to fund the mergers and acquisitions with operating cash flow, as we did with Shoe Station and Rogan’s.

In terms of sales, VF Corp. said this week that it has completed a strategic review of its portfolio, which includes Vans, Timberland, Supreme and The North Face, and that it will soon update analysts and investors on its progress.

Macy’s Chief Financial Officer Adrian Mitchell also spoke positively about the deal market this week, describing the retailer’s progress in monetizing its assets. In March, Macy’s said it would close several distribution centers and “monetize selected assets,” possibly through sale or sublease. Mitchell told analysts on Tuesday that the company is “certainly encouraged by the deal activity we’re seeing.”

“Our main focus is on quality transactions, finding the right buyers and making sure we get the right price,” Mitchell said.

Going forward, the opportunity to deal will depend largely on the health of the IPO market and the cooperating economy and interest rates. With the exception of Amer Sports’ February IPO, the footwear IPO market has been quiet since Birkenstock’s October IPO last year (though there are rumors that Golden Goose is working on a public debut). But this may change in the second half of 2024.

According to PwC’s 2024 consumer M&A forecast, there will likely be more fashion-related deals in 2024 as brand owners look to overhaul their portfolios and change their structures.

“With consumer discretionary spending likely to remain challenging and levels of anxiety continuing, the fashion market in 2024 will be increasingly polarized between winners and losers,” reads a January PwC report authored by Hervé Roesch, global PwC UK consumer markets specialist, transaction leader and partner. “We expect successful companies to leverage their balance sheets and operating platforms to acquire valuable brands.”