It may be a tough ask getting buyers interested in mid-range apparel groups in the current economic market, but for luxury brands it’s another matter.
Amid an environment where consumers are reigning in their spending, top-end shoppers haven’t broken stride.
It comes at a time when the owners of Australian luxury designer clothing brand Zimmermann are believed to be working with Rothschild & Co on a sale that could top $1bn.
Should private equity be the buyer, the challenge for any firm would be sourcing debt to fund an acquisition, with most lenders only prepared to offer loans at up to 3.5 times a group’s earnings before interest, tax, depreciation and amortisation.
Yet, it’s quite likely that Zimmermann’s current private equity owner, Style Capital, is keen for at least a partial exit given that some private equity firms are struggling to lock in liquidity events to repay their investors, because some asset values have fallen in the tough economic environment.
In 2020 Style Capital bought a stake in the iconic brand created by Nicky Zimmermann’s designs for a price valuing the business at about $600m, but since then Zimmermann has gone to a new level. It is able to draw from the deep pool of Paris-based designers given its international presence, and it now has a large number of stores globally in some of the most prestigious locations for luxury goods.
This includes the south of France, the Hamptons in the US and London in the UK.
Last year the Estee Lauder Companies purchased the Tom Ford luxury brand for a price that valued the business at $US2.8bn, in what is further evidence of the sorts of values that companies can fetch in that end of the market.
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