Fashion and retail's go-go dealmaking days ended earlier this year as inflation spiked, Russia disrupted the world and markets by invading Ukraine and the robust recovery melted into recession worries.
Two busted deal processes from Kohl's Corp. and Walgreens last week just confirmed that - although the mergers and acquisition party has morphed into a waiting game that could see more transactions and more down-to-earth prices next year.
Why the Fiorucci Store Was the Mother of All Retail Concepts
Unites States Retail in the Aftermath of Police Brutality Protests
Behind The Veil at Hermès' San Francisco Reopening
For now, it looks to be a quiet summer and fall with perhaps some deals underway wrapping up, but little new activity as the economy sorts itself out. The question is just how long that takes.
Kohl's Corp. took itself off the auction block on Friday, ending its exclusive buyout talks with The Franchise Group and noting its downwardly revised offer of $6.8 billion reflected "the current financing and retail environment" and "was not fully executable or complete."
Similarly, Walgreens pulled its British drugstore chain Boots off the market, noting that no one was able to make an offer that "adequately reflects the high potential value of Boots and No7 Beauty Company" and blaming the financial markets.
More indicative of what the market could see in the immediate future is Enjoy - Ron Johnson's struggling commerce-at-your-door concept that successfully went public via SPAC last year, but fell into bankruptcy last week.
Enjoy was part of a rush to the public market last year that also saw Warby Parker, Rent the Runway, Allbirds, ThredUp and more make their way to Wall Street, taking advantage of sweet valuations only to get caught up quickly in the market whirlwind that is now testing their businesses and brands.
With the S&P 500 down 20.6 percent in the first half, inflation running at a clip not seen in 40 years, the supply chain still backed up and COVID-19 lingering, few companies are looking to do a deal today.
Next year could be another story.
Deborah Weinswig, chief executive officer and founder of the retail and tech-focused Coresight Research, is looking for a direct-to-consumer consolidation as e-commerce brands struggle.
"The companies that are left standing will get stronger because they'll have cash on the balance sheet and they'll be able to pick up some of these companies," Weinswig said. "We'll see less money being spent on tech and potentially more available for acquisitions.
"Everybody's kind of building their wish list," she said. "When the prices hit their expectations … we're going to see things happen very quickly. It's not that people don't have the balance sheet to do it, it's just that everybody thinks everything is going to get a lot cheaper. We're not technically in a recession, but it certainly feels like we're heading there."
Weinswig said there could be a "very active" deal market in six months or a year.
William Susman, managing director at Threadstone Advisors and a veteran fashion dealmaker, said transactions that are nearing the finish line can still get done, but that few new deal processes would start until there is "more clarity on economic direction."
Clarity on that score might still take some time - just as it will take a while for owners to let go of the valuations their companies were tagged with last year.
"Seller expectations haven't changed, but buyers' expectations are lower," Susman said. "Additionally, private equity loves reward with no risk and in a cloudy, uncertain market, they sit on the sideline."
While the beauty market remains hot - as it has been for years - Susman said pure play ecommerce is not.
"The bloom is off that rose," he said. "Valuations have gone from three-times revenues to less than one-times revenue. And there's a real sense that e-commerce is not growing as it was during the pandemic. People are talking omnichannel more so than direct."
And companies are focusing on their core in a world of troubles.
"It's back to basics," Susman said. "If you have great merchandise at fair prices and things the customer wants, you're going to do very, very well."
Levi Strauss Ramps Up With Five-year Plan, $10B in Sights
PVH on Target as Strategic Plan Kicks Off
The Mouse Missteps: Lessons From Disney's 'Don't Say Gay' Debacle