Highlights from this month’s Apparel, Accessories & Footwear Market Monitor:
• Public companies in Apparel, Accessories and Footwear (“AAF”) sector outperformed the S&P 500 across the board over the past year. The Diversified and Aspirational indices led the sector, increasing 51% and 50%, respectively.
• Public company valuations in the AAF sector are at record highs, and the median EV/EBITDA multiple of AAF companies is 2.0x higher than the S&P 500, the highest variance in more than five years.
• U.S. middle market M&A transaction volume was down 8% in the first half of 2013, and AAF transaction activity was down 13%, reflecting a lull following the tax-driven flurry of transactions at the end of 2012. We expect this trend to reverse in the second half of the year, driven by strategics’ record stock valuations and strong cash balances, and a record amount of expiring PE capital.
