As economic headwinds intensify and geopolitical tensions ripple through global supply chains, a new wave of fashion mergers and acquisitions (M&A) is taking shape — not as a sign of aggressive expansion, but as a strategy of survival, recalibration and reinvention. For many, consolidation has become a lifeline.
In recent months, the fashion industry seems to have renewed its interest in deal-making, despite high interest rates and market volatility that threaten the sector’s more fragile players. From Dick’s Sporting Goods’s $2.4 billion plan to acquire Foot Locker to Kontoor Brands’s agreement to purchase Scandi sailing stalwart Helly Hansen for $900 million, these deals reflect both urgency and opportunity. While high-performing labels will always be desirable to well-heeled acquirers, struggling brands with weakened equity values have become appealing targets for better-capitalised companies seeking scale, efficiency — and in some cases, a new identity.
“The current environment could be conducive to acquisitions of companies under stress by stronger companies with greater financial flexibility and strong operating trends,” says Raya Sokolyanska, VP of corporate finance at financial services firm Moody’s. Yet not all deals deliver — and history suggests many fail to live up to expectations.
Roughly 11 per cent of retail and apparel companies are now rated ‘Caa1’ or below by Moody’s, a rating that suggests they are of poor standing and subject to very high credit risk, signalling a high likelihood of default. While Sokolyanska says this is tracking consistent with last year’s levels, the percentage obscures deeper instability within fashion’s sub-sectors. For lower-tier brands catering to price-sensitive consumers, even modest operational missteps — from inventory mismanagement to supply chain delays or ineffective merchandising — can carry disproportionate consequences. These businesses typically operate on tighter margins with less brand equity to cushion volatility, leaving them more exposed to shifts in demand, rising input costs and consumer pullback. In an unpredictable trade environment, the margin for error is exceptionally thin.
“Fashion is broadly under pressure as consumers continue to spend more cautiously, especially on non-essential items,” Sokolyanska says. Heightened tariffs on categories like footwear and sweaters — where nearshoring remains tricky — have driven up costs, disproportionately affecting companies already carrying high debt loads or engaged in turnarounds.
Neil Saunders, managing director of retail at management consultancy Globaldata, notes that multiple macroeconomic factors are influencing M&A dynamics. Hiked capital costs and an increased focus on return on investment (ROI) have led to more conservative valuations. Yet, as organic growth becomes harder to sustain, acquirers are showing greater interest in targets with growth potential. Smaller players, facing tough market conditions, are more open to acquisition or partnership.
M&A activity in US fashion has remained relatively steady over the past five years, according to S&P Global’s market intelligence. Deal volume peaked at 52 in 2021, dipped to 47 in 2022, then fell to 36 in 2023 — the same level as in 2020. In 2024, the industry saw 43 transactions. With 23 deals announced so far this year, 2025 is pacing in line with historical averages.
Though defaults have been limited, signs of distress are surfacing, with several recent downgrades — among them Kohl’s, Under Armour and Foot Locker — highlighting the sector’s uneven performance. Each downgrade reflects a different mix of strategic risk, soft consumer demand and the mounting unpredictability of tariff policy.
“The chaos and confusion caused by President Donald Trump’s completely unwarranted tariff-driven trade war will cause lost sales and profitability while delaying strategic decision-making throughout the fashion industry,” says Mark Cohen, former director of retail studies at Columbia Business School.
Deals as defense
After tariffs triggered a wave of uncertainty, wiping out significant value and bringing M&A activity to a standstill, that freeze is beginning to thaw, with deal-making showing signs of renewed momentum, according to Triangle Capital investment bank partner Richard Kestenbaum.
Deals can still be made in any market where sellers are sufficiently motivated. In today’s climate, that typically means sellers facing pressure — companies with weaker balance sheets and limited tolerance for prolonged uncertainty. The current environment, Kestenbaum suggests, is ultimately a test of financial resilience, where the strongest balance sheets are positioned to acquire those less equipped to weather volatility.
While turbulence around US tariffs is likely to cool M&A appetite in the short term, Alex Grünwald, global co-head of the consumer group at Houlihan Lokey, sees room for cross-border activity, especially between Asia and Europe. Recent deals, including Houlihan Lokey’s advisory role in the Woolrich investment deal with China’s Baoxiniao Holding, reflect growing Asian interest in European assets. High-profile transactions — like Prada’s acquisition of Versace and 3G Capital’s purchase of Skechers — suggest strategic buyers remain active, especially when regional synergies are in play.
Cultural alignment
In today’s climate, M&A appears to be less about rapid growth and more about navigating volatility. For struggling brands, consolidation offers a path to survival. For acquirers, it’s a way to boost market share, diversify portfolios and reduce costs.
Dick’s acquisition of Foot Locker is a striking example. On paper, the deal offers synergies in merchandising, vendor negotiations and consumer reach. But integration could prove difficult, given the companies’ distinct operating models. With larger, typically standalone stores, Dick’s Sporting Goods appeals to a more suburban, affluent consumer with broad, multi-sports interests. Foot Locker, by contrast, is deeply rooted in urban markets and basketball culture, operating primarily in mall-based locations. The acquisition could help Dick’s gain a stronger foothold in a consistently loyal basketball consumer base — a demographic it doesn’t currently dominate. The deal reflects a strategic effort to bridge two distinct shopper profiles under one retail umbrella.
“Foot Locker has been struggling while Dick’s has been doing very well,” Cohen says. “But synergistic savings are rarely fully realised as forecasted.” These projections, he notes, are often crafted by investment bankers eager to sweeten deals and by executives intent on closing. “In my experience, these projected ‘synergies’ are almost invariably overly optimistic, and frequently overlook the significant costs and risks involved in capturing those savings.”
Cultural alignment, often disregarded by deal brokers, can derail even the most promising mergers. “It’s like a marriage — you don’t truly understand your spouse until you’ve lived with them,” Cohen says.
Some recent deals have demonstrated more focused strategic alignment from the outset. One example is Kontoor’s pricey play for Helly Hansen, marking a significant diversification move for the denim-focused parent company of Wrangler and Lee. The deal brings Kontoor firmly into the premium outdoor and technical apparel space, expanding its reach beyond jeans and workwear into a category with long-term growth momentum. This strategic move recalls a similar playbook from a decade ago.
The acquisition echoes VF Corporation’s 2011 purchase of Timberland, generally regarded as a strategic success that added a performance-driven, lifestyle-meets-outdoors brand to VF’s portfolio without cannibalising existing offerings. Rita McGrath, management professor at Columbia Business School, describes the Timberland deal as a compass for the current M&A climate — a reminder that the most compelling opportunities lie in acquiring brands that complement rather than replicate.
Yet while strategic fit is critical, McGrath emphasises that successful M&A also hinges on less visible factors. An often overlooked but essential element of M&A strategy is governance, according to McGrath. She points to the governance process as one of the most powerful yet frequently underutilised tools in evaluating acquisitions. In many cases, companies either lack a formal structure or rely on internal power dynamics to drive decisions.
McGrath argues that disciplined acquirers establish a strategic scorecard in advance — a clear framework that defines what a good acquisition looks like. When a potential deal arises, it’s assessed against those predefined criteria, allowing for consistency and objectivity. But few organisations demonstrate this level of rigour in practice.
Pruning and portfolio strategy
The current M&A landscape isn’t just about acquiring, it’s also about streamlining. As growth slows across large portfolios, companies are reassessing which assets align with their long-term strategies. Levi Strauss divesting Dockers, Capri selling Versace and Tapestry shedding Stuart Weitzman all reflect a focus on profitability and brand equity — often at the expense of legacy labels.
Some divestitures lay the groundwork for broader consolidation aimed at improving margins or fuelling innovation. “As the tectonic plates shift, companies feeling the earth shake shore themselves up by buying the weaker players and trying to outgrow the problem,” says Jan Rogers Kniffen, CEO of J Rogers Kniffen Worldwide. “It works — for a while.”
Even among financially healthy companies, the rationale for M&A is shifting. Cost control and category diversification are rising in importance. Partnerships and joint ventures — once rare in fashion — are gaining favour as companies embrace “asset-light” strategies. Authentic Brands Group has pioneered a licensing-led model that allows it to scale its portfolio while preserving liquidity — a strategy it is now applying to Dockers, which it agreed to acquire from Levi Strauss last month. Rather than operating its brands directly, Authentic relies on a network of licensees to extend global reach across categories and regions. This approach reduces overhead, accelerates market entry and gives the company flexibility to pursue additional deals. By pairing brand ownership with asset-light operations, Authentic positions itself as both a consolidator and an enabler in the evolving retail landscape.
The recent joint venture acquisition of heritage labels Badgley Mischka, Rachel Rachel Roy, C&C California and Kay Unger Design by Established Incorporated and ACI Licensing reflects a different strategy: pairing brand equity with licensing and distribution expertise. “In theory, this combination should inject new energy into the brands and accelerate their growth trajectory,” Saunders says.
What’s next: Scale, scarcity, or stalemate?
Looking ahead, analysts expect continued consolidation, especially among smaller and more distressed players. “We could see more consolidations to improve scale and spread overhead costs over more sales volume,” Kniffen predicts.
But the macro environment will shape the pace.
The Federal Trade Commission’s (FTC) decision last year to block Tapestry’s proposed merger with Capri underscores the complexities of consolidation in the luxury sector. In response, Tapestry agreed to sell Stuart Weitzman to Caleres, allowing it to concentrate on building Coach and Kate Spade — brands with stronger strategic and synergistic alignment.
Capri is reportedly gearing up to sell off Versace as well as Jimmy Choo. Vogue Business breaks down who could swoop in — and what it would mean for stablemate Michael Kors.
Meanwhile, the most storied luxury conglomerate continues to set the standard for M&A execution. LVMH’s patient, strategic integration of Tiffany Co stands in contrast to the rushed deals common in mid-tier fashion. “LVMH takes years to fully understand what makes a new acquisition tick and how to integrate it,” Cohen says. “That process, while logical, is still the exception.”
At the same time, a different form of consolidation is taking shape within the luxury space. Deals like Saks’s acquisition of Neiman Marcus and Bergdorf Goodman signal a push towards vertical consolidation in luxury retail. “That move was clearly an attempt to get scale in luxury,” Kniffen says.
Fashion is at a crossroads. While the return of deal activity may suggest renewed confidence, its drivers are largely defensive. For many, M&A is a means of weathering turbulence, not transcending it.
As Cohen puts it: “Historically, retail mergers and acquisitions are more indicative of long-range decline than success.”
Comments, questions or feedback? Email us at feedback@voguebusiness.com.
More from this author:
Is this the end of fashion’s international shipping?
