Fashion & Luxury Private Equity and Investors Survey

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Fashion & Luxury
Private Equity and
Investors Survey 2020
Global report
3
Fashion & Luxury Private Equity and Investors Survey 2020 | Preface
Preface
During 2019, Fashion & Luxury (F&L) continued to grab
the attention of PE funds and Investors. Some have
raised special vehicles to be on top of trends and to
recognize the best assets in the industry.
During 2019 we oversaw a globalization slowdown,
the rise of populism in developed nations and
prominent geo-political instabilities affecting the
global economic scenario.
In this context, despite market challenges and record
high valuations, the F&L industry remained a major
priority for PE funds and Investors.
COVID-19 spread will strongly affect the balance
for 2020, which will likely be one of the most testing
years in recent memory; not since fnancial crisis
of 2008/09 has so much uncertainty pervaded
the market so quickly. The unstable global trading,
political and macroeconomic environments, provide
a major challenge for Fashion & Luxury players,
whose strategies, sales channels, supply chain and
employees will likely be stressed to varying degrees.
The repercussions of this changing global landscape are
quickly setting the bases for sharp changes in the F&L
industry, where the increasing presence of disruptive
technologies and the digitalization of the business
and luxury worlds are already affecting its key players
and their business models.
In this context, global investors interested in the
Fashion & Luxury industry are reviewing their
expectations and strategies for the next years.
In order to analyze and measure market trends and
expectations on M&A activities, Deloitte has launched
the ffth edition of the “Global Fashion & Luxury
Private Equity and Investors Survey”.
5
Fashion & Luxury Private Equity and Investors Survey 2020 | Methodology and contents
Methodology and contents
The study considers more than ten sectors of the F&L industry, of which three are Personal Luxury Goods.
• •
•• •
GEO CONTENTS
REMARKS DATA SOURCE SCOPE

Primary
data level
• • •
• •
Full secondary data Full primary data
Global Global
The investors’ survey targeted senior members within private equity funds, with a substantial knowledge
of the F&L industry
Company annual
financial reports and
presentations
Interviews with
C-level industry
experts
Deloitte expertise
News and reports
from major media
providers
• Investor press
releases
Company press
releases
Size of M&A deals by F&L sector
Target company profiles
• Investor profiles
Analysis of global deals
Sales and margins performance
by sector
Analysis of F&L sectors’
attractiveness for investors
• Covid impact assessment by sector,
focusing on Personal Luxury goods
SECTORS COVERED
The study considers more than ten sectors of the
F&L industry, of which three are Personal Luxury Goods
M&A DEAL
MONITOR 2019
F&L INDUSTRY BUSINESS
PERFORMANCE
MARKET SEGMENTATION
Absolute
Aspirational
Accessible
Fashion
Personal Luxury Goods
Apparel &
Accessories
Furniture
Luxury
Hotels
Luxury
Cruises
Luxury
Restaurants
Digital Luxury
Goods
Private
Jets
Yachts Luxury
Cars
Electric
Cars
Cosmetics &
Fragrances
Watches &
Jewellery
Aspirational
Fashion
Absolute
Price point analysis
Luxury
Consumers’ perception
Primary
data level
• • • • •
Global
Online survey based
on Computer
Assisted Web
Interviewing (CAWI)
Interviews with
Private Equity
funds’ top
management
F&L market outlook and
Covid-19 impact
Exit and investment strategies
in 2020
Investors’ current portfolio of
F&L assets
PRIVATE EQUITY AND
INVESTORS SURVEY 2020
Primary
data level
7
Fashion & Luxury Private Equity and Investors Survey 2020 | Key takeaways
Key takeaways
Market Insights and Perspective of F&L Industry
Business Performance of the F&L industry in 2019
Within its analysis on F&L industry business
performance, Deloitte aims at assessing sales and
proftability growth by each segment to highlight the
most attractive sectors for investors. The analysis has
been conducted on a panel of 81 players with a total
sales of 633B$, 44 of them operating in the Other
Luxury sector and generating ~66% of sales, while
the other 37 players belonging to the Personal Luxury
Goods sector and generating ~34% of sales.
Overall, the panel of companies in the Personal Luxury
Goods sector reached in 2019, 1.3 times the 2015 sales
level, growing at a +5.7% CAGR 2015-19, with a slight
increase in proftability (+0.1%). On the other hand,
companies in the Other Luxury sector, reached in 2019,
1.2 times the 2015 sales level, growing at a +4.1% CAGR
2015-19, with a slight decrease in margin of -0.2%.
Average EBITDA margin in Luxury sectors was +15.2%
in 2019 (-0.1% vs 2015), with the Personal Luxury Goods
sector outperforming the industry (+19.1% avg. EBITDA
margin). Apparel and Cruises are the top performing
sectors in terms of proftability (+24.6% and +23.3%
EBITDA margin), confrming with Cosmetics, the highest
sales growth in the F&L industry in 2015-19 period.
Fashion & Luxury outlook from market
perspective
The Covid-19 pandemic is expected to have a signifcant
impact on F&L industry with different immediate
effects between Personal Luxury Goods (PLG) and
Other Luxury sectors. For the Personal Luxury Goods
(PLG) the impact of Covid will be initially less severe
with market projected to achieve 1.1 times the 2019
level by 2025 (~ +1.9% CAGR 2019-25F). The Other
Luxury sectors are instead expected to suffer more the
Covid-19 impact (especially luxury Hotel and Cruises),
with an average drop of -25% in 2020/21, followed by a
robust recover that will bring the market to 1.2 by 2025
(~ +2.4% CAGR 2019-25F).
In terms of sectors, the market expects Luxury Hotels,
Cruises, Watches & Jewellery and Furniture to be
the most affected sectors by the pandemic, while
Cosmetics & Fragrances and Private Jets will be the
least affected. In terms of post Covid recovery speed,
Luxury Hotels, Apparel & Accessories and Cosmetics &
Fragrances will be at the forefront, benefting from the
re-open of borders and the increased focus on online
sales.
Within the PLG sector, the market expects Europe and
the Americas to suffer a longer demand contraction
with an expected drop in sales from 30 to 40% and
expected recovery time from 12 to 18 months. The
mostly adopted strategies to overcome the crisis will be
online distribution channels focus, digital marketing and
promotion and environmental sustainability.
8
Fashion & Luxury Private Equity and Investors Survey 2020 | Key takeaways
2019 Global M&A deal overview
The Fashion & Luxury industry proved to be fertile
soil for M&A activities with #271 deals registered in
2019, presenting a slight but stable increase of #6
deals compared to the previous year. Personal Luxury
Goods deals have decreased (-53 deals versus 2018)
with Cosmetics & Fragrances (12,5% of total) decreasing
by #10 deals, and both Watches & Jewellery (4%) and
Apparel & Accessories (17%) decreasing by #17 and #26
deals respectively. The Hotels sector, which represents
43% of total, was the best segment in terms of deals
growth with respect to the previous year, increasing
by #40. M&A deal volumes in other sectors increased,
with activity in Restaurants (+7) and Jets (+2) growing
compared to the previous year. The average deal value
has decreased at $164m in 2019, with a $69m decrease
from 2018.
M&A deals in Europe slightly decreased (-4 deals), whilst
North America increased (+5 deals) and Asia-Pacifc
remained almost flat.
Luxury Cars deals signifcantly increased during 2019
(+6 deals), driven by the very active electric car’s
industry.
M&A Deal Monitor 2019
Top deals in 2019
Acquisitions in Watches & Jewellery, Hotels and
Automotive sectors drove numbers in 2019:
• Tiffany & Co. by LVMH (~16B$ for 100%).
• Strategic Hotels & Resorts by Mirae Asset Global
Investments Co (~5.8B$ for 100%).
• Rivian Automotive, LLC by 4 round fundings (~2.9B$
for 100%).
Other relevant acquisitions in 2019 involved Cosmetics
& Fragrances, Restaurants and Apparel &
Accessories companies:
• Coty, Inc. by JAB Holdings B.V. (~1.7B$ for 20%).
• Cooper’s Hawk Winery & Restaurants (~700M$ for
100%).
• Roberto Cavalli SpA by Damac Properties Co. LLC
(~160M$ for 100%).
M&A features and strategies
Of the M&A deals completed, 55% were carried out by
Strategic investors (1%pts less than in 2018). Financial
investors, involved in 45% of the total, increased only
slightly the number of deals (+5 YoY).
Strategic sellers were involved in 67% of the
transactions (vs.56% in 2018). Generally, bidders’
investments focused equally on a buyout and
consolidation strategy (32% and 34% of the times
respectively).
9
Fashion & Luxury Private Equity and Investors Survey 2020 | Key takeaways
COVID-19 Impact from investors’ perspective
Within its Private Equity Survey, Deloitte focuses on
understanding investors’ perceptions of the potential
growth in the F&L market in coming years. Due to the
spread of Covid-19, investors expect to make changes
in the way they invest. In terms of sectors, in the next
three years investors expect Cars, Hotels, Restaurants,
Cruises and Retailing to be the most affected sectors
by the pandemic. Apparel, Watches, Yacht and Private
jets are foreseen to remain stable while Cosmetics &
Fragrances and Furniture will show a slight increase.
Digital Luxury will be the sector most beneftting from
the pandemic and that is expected to sharply grow in
the next three years
In terms of geographical areas, Asia and Middle East
are expected to have a strong growth in the F&L
industry, thanks also to a faster recovery from Covid-19
pandemic. North America and Japan are expected to
remain stable in the next three years, while Europe
and Latin America are foreseen to suffer more from
Covid-19 impact and therefore to have a decrease
phase.
Private Equity and Investors Survey 2020
2020 investment strategy
70% of funds are considering investing in an F&L
asset in 2019, with notable interest rising in: Apparel &
Accessories (+28 pts), Cosmetics & Fragrances (+15 pts),
Digital Luxury (+53 pts) and Furniture (-17 pts).
Interest across these categories is increasing compared
to previous year, mostly noticeable at Digital Luxury
Goods.
Both current investors and newcomers are more
attracted to consolidated sectors within the F&L
industry (such as Apparel & Accessories and Cosmetics
& Fragrances) where market knowledge is widespread.
Newcomers seem more interested in Digital Luxury
Goods. With respect to 2019, the continuous
consolidation of the F&L industry is moving investments
towards medium-sized companies (+17 percentage
points), where investors plan to boost performance
by implementing internationalization, new production
development (+14 percentage points) and digital
strategy design (which grew by 11 percentage points).
The consensus is that forecast returns will range from
21 to 30%.
11
Fashion & Luxury Private Equity and Investors Survey 2020 | Market Insights and Perspective of F&L Industry
Market Insights: Deloitte Fashion & Luxury panel in 2019
24%
Players
111
Apparel & Accessories
39%
12%
Players
111
57
Watches & Jewellery
Apparel & Accessories
24%
Apparel & Accessories
Market Insights and Perspective
of F&L Industry
The Fashion & Luxury industry business performance analysis was conducted on a panel of 81 companies, totalizing almost 633B$ of sales.
Notes: Values reported at constant exchange rate
Source: Elaboration on Company Financial Report data
76%
24%
111
Apparel & Accessories
Players
Tot.
111B$ Sales
Players
by area
20
Ls
111B$
Map FY2019
10
42%
40%
55
17%
Cosmetics & Fragrances
Players
Tot. Sales
Players
by area
6
55.4B$
94%
6%
357
Cars
Players
Tot.
Sales
Players
by area

B$ 31.7
82%
4%
14%
32
Luxury Hotels
Players
Tot.
Sales
by area
4
31.7B$
82%
4%
14%
32
els
Players
Private Jets
Tot. Sales
Players
by area
2
55.4B$
Players
Tot. Sales
Players
by area
11
56.5B$
layers Map FY20
1
357
Players
rs Map FY2019
Tot.
Sales
10
357B$
94%
6%
357
Luxury Hot
Players
4
357
Luxury Cars
Players
Tot.
Sales
Players
by area
10
357B$
Luxury Cruis
Top Players
4
357B$
37%
8
Private Jets
Players
Tot.
Sales
Players
by area
2
8.2B$
29%
100%
5
Cruises
Players
Tot.
Sales
Players
by area
4
3.9
B$
62%
38%
4
Furniture
Players
Tot.
by area
8
3.9B$
62%
38%
4
Players
Yachts
Tot.
Sales
Players
by area
16
8.2B$
Players
4
31.7B$
Top P
29%
Top Play
by area
Furniture
ot.
31.7B$
5
Luxury Cruises
Players
Tot.
Sales
Players
by area
4
4.7B$
Notes: Values reported
Source: Elaboration on
Deloitt
4.7B$
Tot.
8
3.9B$
Notes: Values reported at constant exchange rat
Source: Elaboration on Company Financial Rep
Players
by area
Players
Sales
16
4.9B$
e
ort data
a
l: Players
81
49%
39%
12%
57
94%
6%
82%
4%
14%
32
63%
5
29%
100%
62%
38%
4
Watches & Jewellery
Luxury Hotels
Furniture
Players
Yachts
Personal Luxury
Goods
Players
of
turnover
Tot.
Sales
Sales
Top Players Map FY2019
Other F&L
Sectors
Players
by area
Players
by area
Deloitte F&L Panel: Players Turnover
Rest of the World North America Europe
Tot.
37
44
81 ~ 633B$
34%
66%
Players
of
turnover
Notes: Values reported at constant exchange rate
Source: Elaboration on Company Financial Report data
76%
Players
11
39%
12%
57
49%
Tot.
Players
6
55
17%
39%
20
Watches & Jewellery
11
12%
57
Cosmetics & Fragrances
6
40%
55
17%
Watches & Jewellery
Cosmetics & Fragrances
40%
Players
Players
42%
40%
55
17%
82%
4%
14%
32
63%
37%
8 5
62%
38%
4
Luxury Hotels
Players
Luxury Cosmetics & Fragrances
Players
Private Jets
Players
Furniture
Players
Luxury Yachts
Perso
G
Tot.
111B$ Sales Sales Tot. Sales
Tot.
Sales
Tot.
Sales
Tot.
Sales
Ot
S
Players
by area
Players
by area
Players
by area
Players
by area
Players
by area
Players
by area
Players
by area
Deloitte F&L Panel: Players Turnover
Players
Rest of the World North America
Tot.
Sales
4 2
8 16
56.5B$ 55.4B$
B$ 8.2B$
B$ 4.9B$
37
4.744
81 ~ 633B$
34%
66%
76%
49%
42%
94%
6%
357
63%
37%
8 5
100%
5
Luxury Cruises
Players
Private Jets
Players
Players
Luxury Cars
Yachts
Personal Luxury
Goods
Players
of
turnover
Tot.
111B$ Sales Tot. Sales Tot. Sales
Tot.
Sales
Tot.
Sales
Sales
Other F&L
Sectors
Players
by area
Players
Players
by area
Players
Players
Players
by area
Players
by area
Players
by area
Players
by areDeloitte F&L PaneTurnover
Players
Rest of the World North America Europe
Tot.
Sales
20 2
4 16
56.5B$ 55.4B$
8.2B$
4.9B$
37
4.7B$
44
~ 633B$
34%
66%
Players
of
turnover
at constant exchange rate
Company Financial Report data
76%
24%
111
49%
42%
63%
37%
8 5
29%
100%
5
es
Players
Players
Players
uxury CarPersonal Luxury
Goods
Players
of
turnover
Tot.
Sales Tot. Sales
Tot.
Sales
Tot.
Sales
Tot.
Sales
Other F&L
Sectors
Players
by area
Sales
Players
by area
Players
by area
Players
by area
Players
by area
Players
by area
Players
by area
F&L Panel: Players Turnover
Players
Rest of the World North America Europe
Tot.
Sales
20 11 6
8 56.5B$ 3.9B$ 4.9B$
37
44
81 ~ 633B$
34%
66%
Players
of
turnover
Notes: Values reported at constant exchange rate
Source: Elaboration on Company Financial
Report data
12
Fashion & Luxury Private Equity and Investors Survey 2020 | Market Insights and Perspective of F&L Industry
Market Insights: Sales performance 2015-19
The F&L top players sales index in 2019 is 1.3x the 2015 value. Personal Luxury Goods show a positive growth (+5.7% CAGR 2015-19) with a
stable EBITDA %. Other luxury sectors are growing less (+4.1% CAGR 2015-19), with a slight decrease in proftability.
Notes: Values reported at constant exchange rate
Source: Elaboration on Company Financial Report data and Desk analysis
125
117
1.2x
2015 2016 2017 2018 2019
100
1.3x
2015-19 F&L Sales Index evolution
(Index of Sales 2015=100, Percentage)
EBITDA %
PLG
19.0%
18.5%
17.3%
18.4%
19.1%
EBITDA %
Other Lux
13.4% 12.6% 12.6% 13.1% 13.2% -0.2
% change
2015-19
+0.1
CAGR
2015-19
+5.7%
+4.1%
Personal
Luxury Goods
Other Luxury
Sectors
Notes: Values reported at constant exchange rate
Source: Elaboration on Company Financial Report data and Desk analysis
2015-19 F&L Sales Index evolution
(Index of Sales 2015=100, Percentage)
13
Fashion & Luxury Private Equity and Investors Survey 2020 | Market Insights and Perspective of F&L Industry
Market Insights: itability performance 2015-19
Average EBITDA margin in Luxury Sectors is 15.2% in 2019 (-0.1% vs 2015), with Personal Luxury Goods (+19.1%) outperforming the overall
industry. Apparel and Cruises are the top growing sectors in terms of sales growth and those with the highest proftability.
Notes: Values reported at constant exchange rate
Source: Elaboration on Company Financial Report data
2019 Average EBITDA Margin by Sector
(Percentage)
Cosmetics &
Fragrances
Watches &
Jewellery
Cruises F Hotels Private Jets urniture Cars Yachts
Apparel &
Accessories
% change
2015-19 +2.4
– -1.0 -1.1 4.7 +0.6 +1.7 +2.1 -4.5 +3.3
% change
2018-19 +1.9
-0.6 +0.7 – +0.1 1.4 +0.1 +3.8 -1.8 +0.1
Avg.
F&L 2019
+15.2%
24,6%
16,6% 16,2%
23,3%
15,1%
12,2% 11,9% 11,3%
5,3%
Average Personal
Luxury Goods
+0.3
Panel
Average
-0.1
Personal Luxury Goods
Other Luxury Sectors
+19.1% Avg. F&L 2015
+15.3%
Notes: Values reported at constant exchange rate
Source: Elaboration on Company Financial Report data
2019 Average EBITDA Margin by Sector
(Percentage)
14
Fashion & Luxury Private Equity and Investors Survey 2020 | Market Insights and Perspective of F&L Industry
Market Insights: Business performance analysis 2015-19
Cruises and Cosmetics are the most attractive sector for F&L investors, with the highest sales growth and margin.
Apparel & Accessories is still the top performing category in terms of marginality.
Notes: Values reported at constant exchange rate
Source: Elaboration on Company Financial Report data
F&L Sectors business performance map
(Percentage)
0 4% 8% 12%
14
2% 14
16
6% 10%
18
20
6 4 2 0
28
8
10
12
EBITDA Margin
(Percentage – 2019)
Furniture
Cars
P
Underperformers
AVG
Cosmetics & Fragrances
rivate Jets
Yachts
Fast growing – low performing
Apparel & Accessories
Cruises
Best in class
Watches & Jewellery
Hotels
High profitability
Sales growth
(Percentage – CAGR 2015-19)
Total Sector
Sales 2019
AVG
Other F&L
sectors
Personal
Luxury
Goods
Notes: Values reported at constant exchange rate
Source: Elaboration on Company Financial Report data
F&L Sectors business performance map
(Percentage)
15
Fashion & Luxury Private Equity and Investors Survey 2020 | Market Insights and Perspective of F&L Industry
Covid impact on Luxury sectors – Market perspective
Historical market trend: Negative Stable Positive
SECTOR
COVID IMPACT
PRE-COVID
TREND
Apparel &
Accessories
Watches &
Jewellery
Cosmetics &
Fragrances
Luxury
Cars
Luxury
Hotels
Private
Jets
Luxury
Cruises
Furniture
Yachts
Focus of next slides
Global sales expected to drop significantly in 2020
(-20%) because of store closing and economic
slowdown during Covid pandemic
High Covid impact (-20/25% on sales) during the
lockdown phase, since this category has not benefitted
from online sales
Covid negative impact on Cosmetics has been slower
with respect to other Personal Luxury Goods categories
(-11%), with major effects in Europe
The luxury segment is expected to be less impacted
from Covid thanks to a non-Chinese based value chain
and high-level target customers
Hospitality is the most affected sector by Covid and
also the luxury hospitality segment is suffering a lot
from travel limitations
Expected increase in demand due to the shutdown
of commercial aviation because of Covid restrictions
The impact of Covid is expected to affect sales for
a long time, particularly in the Asian market
The industry is highly suffering the impact of Covid
Immediate negative impact due to travel restrictions
Potential positive impact on demand due to prices
lowering from suppliers
Post-Covid recovery: Strong Fast Gradual Very slow
Source: Elaboration on Desk analysis and interviews with industry experts
POST COVID RECOVERY
High impact from Covid due to travel restrictions
and health security issues related to this business
It is expected a longer recovery time with some
concerns as expressed by some Luxury interior
designers and furniture brands
After Covid, it is expected an increasing interest in
private charters over group charters or cruise
holidays, boosting the recover
Apparel and accessories is the category that most
benefit from online sales, driving the growth in the
after Covid recovery period
Slow recovery is expected, since this category rely
a lot on tourists flow and on a consolidate in-store
purchasing process
Fast recovery focusing on online sales-channels and
skin care products
Customers will be more aware of natural ingredients,
with more attention on healthcare
After Covid it is expected a solid recovery, in line with
pre-Covid trend
The luxury segment is expected to boost fast as
borders re-open and people will be allowed to
travel
The growth is expected to continue. Customers will
prefer private means of transportation to avoid law
restrictions and preserve health
Covid impact: High Low
Source: Elaboration on Desk analysis and interviews with industry experts
16
Fashion & Luxury Private Equity and Investors Survey 2020 | Market Insights and Perspective of F&L Industry
“How do you think Covid will affect demand and offer in your sector by 2020?”
(Percentage range)
“… As part of the Spring Summer
collection is still unsold in store, we are
reducing the production for the Fall
Winter anticipating the expected
decrease in demand, until the business
will recover …”
Strong decrease Decrease Lower decrease
“… Europe and Americas will suffer
longer the impact of Covid leading to a
demand contraction because of the
pandemic lockdown and the economic
downturn …”
“… Our company, which is more focused
on accessories and leather goods, is
not reducing the production since we
can count on a rising demand from the
online sales channel …”
“… Since luxury companies could no
longer count on the high flow of tourists’
consumption, we are dedicating more
attention on local customers …”
APAC
15-20%
China & Japan
5-10%
Europe
25-30%
Latin America
20-25%
North America
20-25%
RoW
15-20%
Source: Elaboration on Desk analysis and interviews with industry experts
Key insights from C-Level of
PLG companies
Covid-19 impact on Personal Luxury Goods (1/4) – Market perspective
Source: Elaboration on Desk analysis and interviews with industry experts
KEY INSIGHTS FROM C-LEVEL OF PLG
COMPANIES
“… Europe and Americas will suffer longer the impact
of Covid leading to a demand contraction because of
the pandemic lockdown and the economic downturn …”
“… As part of the Spring Summer collection is still
unsold in store, we are reducing the production for
the Fall Winter anticipating the expected decrease in
demand, until the business will recover …”
“… Our company, which is more focused on accessories
and leather goods, is not reducing the production
since we can count on a rising demand from the
online sales channel …”
“… Since luxury companies could no longer count on the
high flow of tourists’ consumption, we are dedicating
more attention on local customers …”
“How do you think Covid will affect demand and offer in your sector by 2020?”
(Percentage range)
17
Fashion & Luxury Private Equity and Investors Survey 2020 | Market Insights and Perspective of F&L Industry
KEY INSIGHTS FROM C-LEVEL OF PLG
COMPANIES
“… We expect sales to be more affected in the
European and American market, while the APAC
market will suffer less due to a faster recovery time …”
“… It is expected a boost in the online sales channel,
that will sustain the market demand especially during
the lockdown pandemic phase …”
“… Companies that don’t have a fragmented footprint
and build solid relationships with suppliers will be
capable to better sustain their business during the
Covid period …”
“… Store closing in Covid phase 1 and sanitary
precautions that will be taken in phase 2, will have
a strong impact on physical retail and wholesale
channels (-20% to -30% on sales). However it is
expected a boost on digital retail (+16%) and digital
wholesale (+12%) channels…”
45%
“How do you think Covid will impact your business in 2020 in terms of sales’
contraction?”
(Percentage on respondents)
“… We expect sales to be more affected
in the European and American
market, while the APAC market will
suffer less due to a faster recovery time
…”
“… It is expected a boost in the online
sales channel, that will sustain the
market demand especially during the
lockdown pandemic phase …”
“… Companies that don’t have a
fragmented footprint and build solid
relationships with suppliers will be
capable to better sustain their business
during the Covid period …”
“… Store closing in Covid phase 1 and
sanitary precautions that will be taken
in phase 2, will have a strong impact
on physical retail and wholesale
channels (-20% to -30% on sales).
However it is expected a boost on
digital retail (+16%) and digital
wholesale (+12%) channels…”
APAC
30%
55%
5%
10%
from 0% to 20%
From 20% to 30%
From 30% to 40%
> 40%
Europe
Americas
50%
15%
30%
5%
Expected drop in sales
20%
55%
20%
5%
Source: Elaboration on Desk analysis and interviews with industry experts
Key insights from C-Level of
PLG companies
Covid-19 impact on Personal Luxury Goods (2/4) – Market perspective
Source: Elaboration on Desk analysis and interviews with industry experts
“How do you think Covid will impact your business in 2020 in terms of sales’
contraction?”
(Percentage on respondents)
18
Fashion & Luxury Private Equity and Investors Survey 2020 | Market Insights and Perspective of F&L Industry
Covid-19 impact on Personal Luxury Goods (3/4) – Market perspective
Source: Elaboration on Desk analysis and interviews with industry experts
“When it is expected the normalization period and how Covid will affect the
Geographical footprint?”
(Percentage on respondents)
APAC
20%
60%
15%
5%
from 6 to 12 months
from 3 to 6 months
from 12 to 18 months
> 18 months
Europe
Americas
45%
0%
10%
45%
40%
5%
50%
5%
“… In Europe, companies more focused
on Northern countries that have been
less impacted from Covid, will have
higher benefits …”
“… Luxury shopping is likely to restart
first in China if the virus remains under
control there. Continued restrictions on
travel will also mean that many
purchases that would have been
made abroad will happen in China,
since Chinese shopping counts a
significant slice of luxury consumption
…”
“… Normalization period in Europe is
expected gradually in 6 to 12 months.
In America we forecast a longer
recovery period (over the year) while
the Asian market will recover faster.
However a pre-Covid situation will be
possible only with the vaccine …”
Expected recovery time
Source: Elaboration on Desk analysis and interviews with industry experts
Key insights from C-Level of
PLG companies
“When it is expected the normalization period and how Covid will affect the
Geographical footprint?”
(Percentage on respondents) KEY INSIGHTS FROM C-LEVEL OF PLG
COMPANIES
“… Normalization period in Europe is expected
gradually in 6 to 12 months. In America we forecast a
longer recovery period (over the year) while the Asian
market will recover faster.
However a pre-Covid situation will be possible only with
the vaccine …”
“… In Europe, companies more focused on Northern
countries that have been less impacted from Covid, will
have higher benefts …”
“… Luxury shopping is likely to restart frst in China
if the virus remains under control there. Continued
restrictions on travel will also mean that many
purchases that would have been made abroad will
happen in China, since Chinese shopping counts a
signifcant slice of luxury consumption …”
19
Fashion & Luxury Private Equity and Investors Survey 2020 | Market Insights and Perspective of F&L Industry
“Which will be the major drivers
and strategies that you will adopt
to overcome the Covid crisis?
“… There won’t be a disruption in
product categories but we expect a
revamping of brand identity and the
valorization of classy luxury, with
customers seeking for elegant shapes
and neutral tones, reflecting a sober life
consciousness …”
“… We are pushing more on the online
sales channel, signing partnerships with
e-commerce platforms …”
“… We are pushing a lot on
digitalization to ensure the business
continuity, launching the first virtual
showroom to collect sales orders …”
“… It is necessary to anticipate shifts in
consumer sentiment and behavior being
more aware of sustainability and of
responsible consumption. Under this
new framework, we are rationalizing
collections and balancing prices …”
Pre Covid
After Covid
Classy luxury
style
Collections
breadth and
depth
Environmental
sustainability
Online distribution
channels focus
Products value for
money awareness
Digital
Marketing &
promotion
High
Low
Source: Elaboration on Desk analysis and interviews with industry experts
Key insights from C-Level of
PLG companies
Covid-19 impact on Personal Luxury Goods (4/4) – Market perspective
Source: Elaboration on Desk analysis and interviews with industry experts
“Which will be the major drivers
and strategies that you will adopt
to overcome the Covid crisis?” KEY INSIGHTS FROM C-LEVEL OF PLG
COMPANIES
“… There won’t be a disruption in product categories
but we expect a revamping of brand identity and the
valorization of classy luxury, with customers seeking
for elegant shapes and neutral tones, reflecting a sober
life consciousness …”
“… We are pushing more on the online sales channel,
signing partnerships with e-commerce platforms …”
“… We are pushing a lot on digitalization to ensure
the business continuity, launching the frst virtual
showroom to collect sales orders …”
“… It is necessary to anticipate shifts in consumer
sentiment and behavior being more aware of
sustainability and of responsible consumption.
Under this new framework, we are rationalizing
collections and balancing prices …”
20
Fashion & Luxury Private Equity and Investors Survey 2020 | Market Insights and Perspective of F&L Industry
Forecast
PLG idx growth: 2.2x
Other Lux idx growth: 1.9x
Drop due to Covid impact, that
will affect in particular other
luxury sectors (avg. -25% YoY 19-
20) with main consequences on
Hotels and Cruises Revenue
242
216
100
2010 2015 2016 2017 2018 2019 2020FC 2021FC 2025FC
Personal
Luxury Goods
Other Luxury
Sectors
Other Lux idx growth: 1.2x
PLG idx growth: 1.1x
Notes: Covid assumptions under a basic scenario
Source: Elaboration on Company Financial Report data, Desk analysis and interviews with industry experts
2010-25F F&L sales index outlook
(Index on Sales 2010=100)
CAGR
2019-25F
+1.9%
+2.4 %
Market Outlook: Sales forecast – Market perspective
After the drop in 2020 due to Covid impact, PLG is expected to achieve by 2025, 1.1 times the 2019 sales level (+1.9% 2019-25F CAGR).
Other luxury segment will initially suffer more from Covid impact, and will reach by 2025, 1.2 times the 2019 sales level (+2.4% CAGR
2019-25F) thanks to a robust and faster recover.
2010-25F F&L sales index outlook
(Index on Sales 2010=100)
Notes: Covid assumptions under a basic scenario
Source: Elaboration on Company Financial Report data, Desk analysis and interviews with industry experts
23
Fashion & Luxury Private Equity and Investors Survey 2020 | M&A Deal Monitor 2019
M&A Deal Monitor 2019
DEALS IN 2018
Sector 2018 2019 Growth
-26
+40
-17
-10
+5
+2
-4
+6
-2
DEALS IN 2019 DEALS
265 +6
73
75
28
44
14
986
47
115
11
34
19
11
4
12
4 2
4 11
271
Personal Luxury Goods (PLG)
+7
Restaurants
Digital Luxury Goods

5
+5
Apparel & Accessories
Hotels
Watches & Jewellery
Cosmetics & Fragrances
Furniture
Private Jets
Yachts
Cars (including Electric Cars)
Cruises
Fashion & Luxury M&A deals
Overview of deals in 2018 by sector Top luxury deals of 2019
Month Target Bidder Stake (%) Value ($m)
Nov.1 Tiffany & Co. LVMH Moet Hennessy Louis Vuitton SE 100 16,192
Sep. Strategic Hotels and Restaurants Inc. Mirae Asset Global Investemnts Co., Ltd. 100 5,800
Dec.
Rivian Automotive, LLC.
2nd by Ford Motors, 3rd by Cox Automotive
and 4th T. Rowe Ass)
Jab Holdings B.V.
Coty Inc.
Millenium & Copthorne Hotels Plc.
City Developments Limited
Deutsche Hospitality
Cooper’s Hawk Winery & Restaurants
Huazhu Group Limited
Ares Management LLC.
Crown Resorts Limited
Kylie Cosmetics, LLC.
Byton, Ltd.
Tatcha, LLC.
Sykes Cottages Limited
Melco Resorts & Enterntainment Limited
Coty, Inc.
China FAW Group Corporation Limited
Unilever Plc.
Vitruvian Partners LLP.
Andaz Singapore
Hoi Hup Realty Pte Ltd.
Dream Cruises Holding Limited TGP Capital LP.
Freehand Hotels
Queensgate Investments LLP.
4 funding rounds (1st led by Amazon.com,
100 2,850
Feb. 20 1,747
Jun. 35 987
Nov. 100 780
Jul. 100 700
May. 20 608
Nov. 51 600
Sep.1 100 500
Jun. 100 500
Oct. 100 481
Oct. 100 475
Aug. 35 454
Jul. 100 400
1) Still Pending | Note: the analysis considers both closed and announced deals during 2019 | Source: Elaboration on Deloitte intelligence data
24
Fashion & Luxury Private Equity and Investors Survey 2020 | M&A Deal Monitor 2019
M&A deals by region and sector 2019
Overview of deals in 2019 by Region
Europe
2018 2019
151 147
2017
109
11 16 25
16
8
54
37
6183 3 4
50
12
46
16
21
47
14
Apparel & Accessories Cosmetics & Fragrances
Others
Hotels
Watches & Jewellery
Private Jets
Yachts
-4
Middle East
2018 2019
3 2
2017
9
1
1 1
2
1 8
+7
North America
2018 2019
58 63
2017
59
18 17
6
5
17
5
10
14
2
5
15
2
15
8
8 9
14
10
+5
Asia-Pacific
2018 2019
36 38
2017
6 7
6
10
8 7
40
1 4
1 2
31
1
42
12
12
+2
# Variance 2018-19
(Number of deals)
Japan
2018 2019
4 8
2017
3
3
2 1 1 4
1
2 1
-5
Rest of the world
2018 2019
6 8
2017
9
1 4
11 4 2
1
3 1 5
+1
KEY FINDINGS
Japan and Europe were
the regions which saw the
higher decrease of Fashion &
Luxury deals in 2019, with 5
and 4 less deals respectively.
North America presented a
slight increase (+5 deals) and
Asia-Pacifc remained almost
flat with respect to 2018.
Luxury Hotel and Apparel
deals were present in all
major regions, and were
notable drivers of M&A
activity globally in 2019.
Middle-East presented a
good increase (+7) in F&L
deals since 2018, thanks to
the Hotels segment.
Source: Elaboration on Deloitte intelligence data
25
Fashion & Luxury Private Equity and Investors Survey 2020 | M&A Deal Monitor 2019
The F&L soil has continued to be a fertile one, with 271 M&A deals in 2019, showing a 2,3% increase from 2018.
Personal Luxury Goods (-11% pts YoY) represent 34% of all deals.
Size of main M&A deals
Source: Elaboration on Deloitte intelligence data
Number of deals in 2019 – Breakdown by sector
(Number of deals, Percentage)
Furniture Private
Jets
Yachts Cruises Total
F&L
Cosmetics & Hotels Cars
Fragrances
Watches &
Jewellery
Apparel &
Accessories
Sector % 17.3%
Var.
# 2018-19 -26
4.1%
-17
12.5%
-10
42.4%
+40
7%
+5
4.1%
+2
0.7%
-2
100.0%
+6
1.5%
-4
4.4%
+6
4.1%
+7
+5
1.8%
PLG YoY 2018-19
-53
Restaurants
55% 66
%
34
%
Digital
Luxury
267
47 11
34
115
19 11 4 12 2 11 5
Source: Elaboration on Deloitte intelligence data
Number of deals in 2019 – Breakdown by sector
(Number of deals, Percentage)
KEY FINDINGS
Cars and Restaurants
registered #6 and #7 deals
more respectively compared
to 2018.
Apparel and Watches &
Jewellery deals decreased by
#26 and #17 respectively.
The Hotel sector has become
more attractive to investors
during 2019, becoming the
top gainer in terms of deal
number (+40).
26
Fashion & Luxury Private Equity and Investors Survey 2020 | M&A Deal Monitor 2019
Source: Elaboration on Deloitte intelligence data
Number of deals in 2019 – Breakdown by sector
(Number of deals, Percentage)
Furniture Private
Jets
Yachts Cruises Total
F&L
Cosmetics & Hotels Cars
Fragrances
Watches &
Jewellery
Apparel &
Accessories
Sector % 17.3% 4.1%
Var.
# 2018-19
-26 -17
-10
(%)
-43% -61%
+5 +2
-4
-30% -30%
-2
+6
+7
-59% -34% -79%
12.5% 42.4%
340% N/A
7%
-30%
4.1%
-30%
0.7%
100.0%
+6
-93%
-93%
1.5% 4.4%
509%
509%
4.1%
-79%
+5
1.8%
-95%
-95%
YoY 2018-19
YoY 2018-19
(%)
+40

N/A

340%
-43%
-61%
-59%
-34%
PLG YoY 2018-19
-53
Restaurants
55% 66
%
34
%
Digital
Luxury
267
47 11
34
115
19 11 4 12 2 11 5
KEY FINDINGS
Apparel saw their average
deal value fall in 2019, while
Cosmetics (+340%YoY) and
Restaurants (+509%) saw their
average value increase.
Cruises (-43%YoY), Automotive
(-61%% YoY), Hotels (-30%YoY),
Furniture (-93%), Private
Jets (-79%) and Yachts
(-95%) recorded remarkable
decreases.
Average value of main deals by sector
Deals related to the Cruises industry were the largest in 2019 as in 2018 with an average value of $436m. Cars and
Cosmetics were the next largest with average value of $370m and $277m respectively. The average deal value of
PLG’s in 2019 was $140m*.
Note: The average deal value has been calculated based upon data of disclosed transactions
Source: Elaboration on Deloitte intelligence data
* Tiffany & Co. Deal has not been taken into account for the calculations but it was the largest one (around $16bn).
Average value per deal in 2019 – Breakdown by sector
($m, Percentage)
Watches
Cruises Cars Cosmetics Digita Luxury l Hotels F F& &L L A Av vg g.. Restaurants Apparel & Jewellery Privat Jets e Yachts Furniture
Avg. PLG
$140m
Personal Luxury Goods
Other Luxury sectors
436
370
277
198 186
164
146
78
64
26 14 12
F&L Average
Note: The average deal value has been calculated based upon data of disclosed transactions
Source: Elaboration on Deloitte intelligence data
* Tiffany & Co. Deal has not been taken into account for the calculations but it was the largest one (around $16bn).
Average value per deal in 2019 – Breakdown by sector
($m, Percentage)
Watches
Cruises Cars Cosmetics Digita Luxury l Hotels F F& &L L A Av vg g.. Restaurants Apparel & Jewellery Privat Jets e Yachts Furniture
Avg. PLG
$140m
Personal Luxury Goods
Other Luxury sectors
436
370
277
198 186
164
146
78
64
26 14 12
F&L Average
Note: The average deal value has been calculated based upon data of disclosed transactions
Source: Elaboration on Deloitte intelligence data
* Tiffany & Co. Deal has not been taken into account for the calculations but it was the largest one (around $16bn).
Average value per deal in 2019 – Breakdown by sector
($m, Percentage)
54
Fashion & Luxury Private Equity and Investors Survey 2020 | Glossary
Glossary
Main terms and abbreviations
Personal Luxury Goods Personal Luxury Goods include the following
sectors: Apparel & Accessories, Cosmetics &
Fragrances and Watches & Jewellery
App&Acc Abbreviation for Apparel & Accessories
AuM Acronym for Assets Under Management
CAGR Acronym for Compound Annual Growth Rate
Cos&Fra Abbreviation for Cosmetics & Fragrances
F&L Abbreviation for Fashion & Luxury
IRR Acronym for Internal Rate of Return
PE Acronym for Private Equity
PLG Acronym for Personal Luxury Goods
RoW Acronym for Rest of the World
Sel Ret Abbreviation for Selective Retailing
Wat&Jew Abbreviation for Watches & Jewellery

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