Banking & Finance

More Apparel Deals Coming? (PVH, WRC, VFC, RL, ARO, ANF, OXM, LULU, UA, COLM)

Phillips-Van Heusen Corp. (NYSE: PVH) has traders and investors speculating about or pondering which other apparel companies may become acquisition targets or which could end up in ‘mergers of equals’ as companies aim to strengthen their market positions.  The PVH bid to acquire Tommy Hilfiger from Apax Partners for about $3 billion is technically a leveraged deal because the market cap for PVH was around $2.3 billion before it was announced.  But now PVH shares are up almost 9% around $52.00 and we saw a 52-week high this morning of $54.64.

This deal may have put others in the spotlight.  Warnaco Group Inc. (NYSE: WRC), V.F. Corporation (NYSE: VFC), Polo Ralph Lauren Corporation (NYSE: RL), Aeropostale, Inc. (NYSE: ARO), Abercrombie & Fitch Co. (NYSE: ANF), Oxford Industries Inc. (NASDAQ: OXM), Lululemon Athletica Inc. (NASDAQ: LULU), Under Armour, Inc. (NYSE: UA), Columbia Sportswear Company (NASDAQ: COLM) and many more are companies are now worth a second look in the sector.  Most of these are more likely acquirers rather than targets, although not in all cases.

We wanted to take a sector review here on each as far as market capitalization rates, brands, and other issues which could or would come into play if more consolidation heads the way of clothing and accessories.

Warnaco Group Inc. (NYSE: WRC), with a $2.1 billion market cap, was in the M&A spotlight back during wave we saw from 2005 to 2007 when companies could get easy access to deal financing.  The problem is that they are deemed a consolidator rather than a consolidation victim.  In short, a buyer rather than a seller if the company has its own choice. It has brands such as Calvin Klein, Speedo, and Chaps.

V.F. Corporation (NYSE: VFC) is a monster in the sector, and one which likes owning brands. With a strong stock and a market cap close to $8.75 billion, VF can have the pick of the brands it wants to own.  It has acquired The North Face, Vans, and others.