Still, investment bankers and private equity players are uncertain if many footwear-specific IPOs will score in the near future, primarily because of size.
There’s no question, however, that broader activity is picking up. While stocks have been uneven of late, The Dow Jones Industrial Average rose 2.3 percent in the first and second quarters — its strongest first half since 1999, according to a recent report by the investment banking arm of William Blair & Co. Firms in the retail space that have recently gone public include RetailMeNot Inc. and Hudson’s Bay Co., which is also in the process of acquiring Saks Fifth Avenue Inc. for $2.4 billion. Meanwhile, Neiman Marcus Inc., Burlington Holdings Inc. and Kellwood Inc.’s sportswear division, Vince, have recently filed for IPOs.
“Across the consumer landscape, including retail, apparel, footwear and other sectors, there is a fair amount of dialogue going on [regarding IPOs],” said
Michael Kollender, managing director of investment banking at Stifel Financial Corp. “If you have a company that’s taken [market] share and has been taking share for a period of time and will grow faster than the economy, that’s a good IPO candidate. So it’s case-specific.”
Talk of lifestyle brand Tory Burch LLC going public has circulated through the market, and it’s certainly possible the company has considered an eventual IPO, investment bankers said. But given that two private equity firms made investments in the business earlier this year, a filing could be at least a year away.
“I wouldn’t be surprised if we saw an announcement for a public offering in the next 12 months,” Brien Rowe, managing director and group head of consumer products at Los Angeles-based Intrepid Investment Bankers LLC, said regarding Tory Burch.
Sources note that in the footwear sector, many companies are too small and too vertical to be appropriate for the public market. Instead, lifestyle brands have the best chance of success. Take the $2.18 billion brand Michael Kors Holdings Ltd.: The stock has nearly tripled since its December 2011 debut.
Shoe firms could take advantage of the public markets if they added other components to their businesses, said Rowe.“Brands become attractive for a public offering after they expand into other categories. Footwear brands would grow first in the U.S., then internationally. And the next natural extension is accessories, bags and then apparel,” he said.
The best candidates have revenues of around $200 million, bankers said.
The M&A market is often a more-attractive option for smaller footwear firms with a “real point of view with their customers,” according to Rowe, though some equity analysts are concerned that recent valuations have become too high.
“We’re working with a number of footwear firms in the lifestyle, outdoor, action-sports arena. The interest is coming from some public companies, but [there is] a lot of private equity interest,” Rowe said.
As reported, The Jones Group Inc. is said to be entertaining bids from strategic and financial players for three options: the entire firm, the apparel division or the footwear business. On the acquirer side, VF Corp., Brown Shoe Co. and Steven Madden Ltd. and others are said to be seeking new targets.