Last week, Tod’s announced a deal with L Catterton to take the brand private. This weekend, here’s a look at why going private is an increasingly attractive prospect for brands. Don’t forget to subscribe to the Glossy Podcast for interviews with fashion industry leaders and Week in Review episodes, and the Glossy Beauty Podcast for interviews from the beauty industry. –Danny Parisi, sr. fashion reporter
Some brands are foregoing the public market and going private
Publicly traded brands have it tough. All your financials are on display for the world to see and shareholders hover over your shoulder making sure you’re returning value to them. In the last year, we’ve seen several brands including Birkenstock go public and immediately feel the heat as their stock underperforms and negative press piles up.
So it’s no wonder we’re seeing more brands go private. On Monday, Italian luxury goods brand Tod’s announced it had reached a deal with the LVMH-backed private equity firm L Catterton to take the brand private and delist it from public trading. L Catterton and Tod’s will each buy back the shares leaving the Della Valle family, who founded Tod’s, owning 54% while L Catterton takes 36%.
Tod’s has been hoping to go private for a while now, initially planning to do so in 2022 but putting the plan on hold until this year. For Tod’s, it’s a chance to reinvigorate its portfolio of brands including Roger Vivier with LVMH’s help, without every step of that process being analyzed by the public. It’s the same reason Farfetch, now owned by Coupang, will operate privately under its new leadership.
Natura & Co., a Brazilian beauty conglomerate, similarly announced last month that it would delist itself from the NYSE. Meanwhile, companies like Express and A.K.A. Brands have received warnings from the NYSE in the last year that they’d be forcibly delisted — essentially made private involuntarily — if their stock prices continued to decline.
The public market is a difficult one right now. CNN’s Fear and Greed Index, which measures market sentiment and investor skittishness, dipped into “extreme fear” at the end of last year as investors were spooked by high oil prices, high interest rates and continued inflation. Those factors combine to make a market where publicly traded brands struggle to keep their investors satisfied. If those factors persist, we may see even more brands choosing to go private this year.
