A lot of firms got hurt with retail investments during COVID, but the space seems much more attractive now. Multiples have come down a lot. Compare that to tech or HC where any attractive asset trades much higher, have to believe there’s opportunity to put money to work within consumer.
Would be interested to learn more as well. My general sense is that many MF and/or UMM have deprioritized consumer (or at least the pure CPG/retail side of things) given its been challenging to reliable predict consumer trends, which tend to be fickle at best
I'm sure the shops like Roark that have a certain specialize have done well but from what I hear, Roark's latest funds haven't been too hot either
The headline here is consumer broadly continues to be challenged since the post COVID years, with MF's (as stated above) de-emphasizing their consumer strategies and MM/UMM funds that play in that space (including those that specialized or even exclusively focused on consumer) pivoting away from the sector.
The deeper dive nuanced view is that performance (and PE interest) across each sub vertical varies substantially. Some quick hits from my perspective
Consumer durables - bad. Would go short of calling it a "blood bath" but seeing a lot of assets that were acquired post COVID (and benefitted from a COVID "bump" with stimulus checks and everyone being home having nothing to do) go belly up or near belly up
Consumer non-durables / CPG - mixed bag. Challenge (from my perspective) here is with such low barriers to entry, ever changing consumer preferences, and marketing spend driving up CAC, it's tough to figure out winners and losers. Still see some major activity with recent investments in Rhone, Vuori, athletic brewing, spin drift, etc. - TBD how those go
Multi-site retail - largely good, with better returns (and activity) on the less discretionary / repeat purchase side of the spectrum (think low cost gyms, QSRs, etc.) than the pricier lux side of things (think vacations, high end entertainment, etc.)
Why in the world would you invest in consumer discretionary in this day and age - trends come and go so much faster than before. Feel the only opportunities are highly established, baseline brands like Nike or really diversified brand umbrellas.
Who would have predicted 10 years ago that Vans was going to become almost totally irrelevant in youth culture by 2025...
Nulla illum est veniam dolorem et et adipisci. Unde sit assumenda nihil. Dolorum nostrum veritatis nemo dolores. Rem est officia quibusdam iusto deserunt. Quidem ut animi qui ut et. Cumque ipsam omnis officiis ab sit harum aliquid.
Ut ipsum maiores harum excepturi molestiae deserunt id. Saepe natus autem adipisci reiciendis similique. Ut unde rerum aut magnam molestiae saepe debitis. Nisi quia vel saepe magnam quia.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
Sorry, you need to login or sign up in order to vote. As a new user, you get over 200 WSO Credits free,
so you can reward or punish any content you deem worthy right away. See you on the other side!
Up
A lot of firms got hurt with retail investments during COVID, but the space seems much more attractive now. Multiples have come down a lot. Compare that to tech or HC where any attractive asset trades much higher, have to believe there’s opportunity to put money to work within consumer.
Would be interested to learn more as well. My general sense is that many MF and/or UMM have deprioritized consumer (or at least the pure CPG/retail side of things) given its been challenging to reliable predict consumer trends, which tend to be fickle at best
I'm sure the shops like Roark that have a certain specialize have done well but from what I hear, Roark's latest funds haven't been too hot either
The headline here is consumer broadly continues to be challenged since the post COVID years, with MF's (as stated above) de-emphasizing their consumer strategies and MM/UMM funds that play in that space (including those that specialized or even exclusively focused on consumer) pivoting away from the sector.
The deeper dive nuanced view is that performance (and PE interest) across each sub vertical varies substantially. Some quick hits from my perspective
Why in the world would you invest in consumer discretionary in this day and age - trends come and go so much faster than before. Feel the only opportunities are highly established, baseline brands like Nike or really diversified brand umbrellas.
Who would have predicted 10 years ago that Vans was going to become almost totally irrelevant in youth culture by 2025...
Nulla illum est veniam dolorem et et adipisci. Unde sit assumenda nihil. Dolorum nostrum veritatis nemo dolores. Rem est officia quibusdam iusto deserunt. Quidem ut animi qui ut et. Cumque ipsam omnis officiis ab sit harum aliquid.
Ut ipsum maiores harum excepturi molestiae deserunt id. Saepe natus autem adipisci reiciendis similique. Ut unde rerum aut magnam molestiae saepe debitis. Nisi quia vel saepe magnam quia.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...