Skip to content
Retail — War — Business — Trade — Inflation — Breaking — Policy — Jobs — Environment — Finance

3 Retail Mishaps Experienced This Year

Unanticipated alterations characterized the financial transactions, catching analysts and spectators off guard.

,   and  Administrator
3 min read
Unexpected shifts occurred in the financial deals, contrary to anticipations of several analysts...
Unexpected shifts occurred in the financial deals, contrary to anticipations of several analysts and observers.

3 Retail Mishaps Experienced This Year

In the ever-changing dynamic of the global market, deals and mergers have their peaks and troughs. For instance, 2020 initiated a surge of initial public offerings, hitting a 20-year high with 12 retail IPOs. The subsequent year saw a flurry of special purpose acquisition companies, serving as a vehicle for public listings.

As we move through 2022, Retail Dive has closely tracked various kinds of deals, such as equity stakes, sales, and spin-offs. Although some mergers and acquisitions proceeded as planned, several deals strayed from their original trajectory, owing to factors including increased capital costs and unpredictable valuations.

Mark Williams, chief revenue officer at Datasite Americas, emphasized the impact of these uncertainties on M&A activities, stating that they had led to the suspension of larger acquisitions and merger processes, particularly among corporate and private equity dealmakers.

Considering the first half of this year, Datasite's research reveals a 31% decline in consumer deal volume in the Americas, encompassing the retail sector.

Kirthi Kalyanam, a marketing professor and executive director at the Retail Management Institute at Santa Clara University, attributes the current deals climate to a mismatch between management and investor expectations. He also points to the retail industry's transformation, pressuring various business models, as well as macroeconomic headwinds and the proliferation of unprofitable new retailers as factors impacting the market for deals.

Here are three significant deals in 2022 that followed unexpected trajectories:

  1. Kohl's and Franchise Group

Now perceived as a turning point in Kohl's history, the retailer rejected a takeover bid from Franchise Group, valuing the department store at $53 per share, initially proposed at $60. Many analysts considered this offer as the highest Kohl's could ever receive.

However, Kohl's management may never have coveted the potential deal initially. Neil Saunders, GlobalData Managing Director, remarked that Kohl's preferred its strategic plans to any potential transaction that might have ensued.

  1. ODP and Staples

The on-again-off-again relationship between ODP and Staples has garnered attention within the office supply world. In the summer of 2022, ODP declined all suitors, choosing to remain independent after a prolonged acquisitions process. This decision came after Staples attempted a takeover bid of $40 per share or $2.1 billion in early 2021.

  1. Blue Nile's acquisition by Signet

Once slated to debut on the stock market through a SPAC deal, DTC jewelry retailer Blue Nile found itself acquired by Signet Jewelers for $360 million in cash instead. Signet, which operates Kay Jewelers, Zales, and Jared among others, highlighted Blue Nile's younger, more affluent, and ethnically diverse customer base as a key motivator for the acquisition.

While there is no crystal ball to predict future M&A trends, economic conditions and investor preferences are expected to shape the retail landscape in 2023. Faced with challenging market conditions, some retailers may seek strategic exits, creating opportunities for consolidation or acquisitions. The industry landscape will continue to evolve, and retailers must navigate these changes to thrive in the ever-changing marketplace.

  1. The unpredictable valuations and increased capital costs in the global market are causing some mergers and acquisitions to veer away from their original plans, as highlighted by Mark Williams, chief revenue officer at Datasite Americas.
  2. Despite the turbulent market conditions, 2022 has witnessed a series of significant deals, each following unexpected trajectories, such as the Kohl's takeover bid by Franchise Group.
  3. Kohl's rejected Franchise Group's takeover bid, valuing the department store at $53 per share, marking a turning point in Kohl's history and a departure from the initial proposed value of $60.
  4. Analysts consider the offer from Franchise Group as the highest Kohl's could ever receive, but its management may never have initially coveted the potential deal.
  5. Neils Saunders, GlobalData Managing Director, noted that Kohl's preferred its strategic plans to any potential transaction that might have ensued.
  6. In the office supply world, the relationship between ODP and Staples has been marked by multiple attempts at takeovers and rejections, with ODP choosing to remain independent in 2022 after a prolonged acquisitions process.
  7. The acquisition of DTC jewelry retailer Blue Nile by Signet Jewelers is another notable deal of 2022, as Blue Nile, which was initially slated to debut on the stock market through a SPAC deal, was acquired for $360 million in cash instead.
  8. As economic conditions and investor preferences shape the retail landscape in 2023, some retailers may seek strategic exits, creating opportunities for consolidation or acquisitions and further evolving the industry landscape.

Read also:

    Related

    Latest