Video: Retail deals market update

Early 2013 saw a number of retailers struggling post-Christmas but what does the future hold? In this video Stuart McKee, head of Corporate Finance for the UK and sector leader for retail and branded goods shares his view of the market.

In particular he discusses recent activity and gives an outlook for:

  • ‘value’ brands;
  • premium and luxury brands; and
  • brands in distress

 

View transcript

Hello, my name’s Stuart McKee and I’m Head of Corporate Finance at PwC and I also cover the Retail and Branded Goods sector. Today I’m going to give you a very short update on what I see happening in the Retail sector in particular as part of our on-going series of updates for our Deal Talk journal.

Anyone who’s in the retail sector will be very clear that this is indeed tough times. Footfall is down and conversion of that footfall into actual spend is very difficult as consumers are cautious with their money and very selective on where they spend it, and this activity is creating a very difficult environment for deals as well, and so we’ve seen very much a reduced number of deals in the retail sector over recent times. That said, there are deals happening, and I think they fall into three main areas at this point in time. One is value, one is premium/luxury in terms of its market positioning, and the third is inevitably distress.

In the value sector we’ve seen I guess most notably B&M Bargains being sold for close to £1 billion, bought by private equity. A very exciting company in a very exciting part of the market, with very ambitious growth plans, and so it will be interesting to watch that business develop over the coming months and years.

In the premium and luxury sector, notably we’ve seen Aurum sold to private equity, again for around £175 million. Aurum is best known for its watches of Switzerland, Mappin & Webb and Goldsmiths brands, and again that is a fine example of interest and activity in the premium and luxury segment, and in distressed, it’s been well documented that it continues to be very difficult for retailers, and we’ve seen the restructuring and change of ownership of businesses like HMV, Blockbuster, Dreams and Republic over recent times.

So I think if I was to be asked what I think going forward. I expect to see very similar things going into the future. I think value will continue to attract a lot of attention and there are a number of transactions that I’m aware of are being contemplated at this point in time, and that would be true of the premium and luxury areas as well, where I think we will see many more opportunities coming to market over the next 12 months, and distress, regrettably I think has not gone away. We will see further distress situations resulting in further restructurings and changes of ownership of those types of businesses.

So much of a much-ness I think for the next 12 months or so.

Well that’s it from me for now. We will be updating on a regular basis, but if there’s anything you’d like to talk about on the retail sector, then please do get in touch.

Thank you.