Business is more of a daredevil act than ever — but the most death-defying leap might just be into the IPO market.
The pandemic, inflation, war, a jumble of political discontent, tariffs and the rise of AI have conspired to make everything strange or just impossible to understand. And that goes double for fashion, which also has to contend with the frazzled consumer.
While the chief executive officers of the fashion industry’s already public companies have been able to “control the controllables” and power through, brands eyeing an IPO are forced to meet the confused world head-on, even as it sinks into their own valuations.
A window for new IPOs, even fashion offerings, opened this summer. SpaceX was the biggest player to jump, but others made it through.
Reformation Inc. made its debut in July, but has seen its stock sink. Menswear giant Tailored Brands filed for an offering, but hasn’t taken the leap yet.
And in the wings are a host of other brands that have been winning in the private market and are seen as contenders, including Alo, Vuori and Skims (which has long been talked about as a potentially strong IPO, but never actually made the jump). Jamie Salter’s Authentic Brands Group has signaled its intent for an offering in the short term.
IPOs — when a company or its investors sell shares on the open market — can pump up or deflate fashion egos as the investing public at large weighs brand, financial results, management, strategy and market landscape and boils it all down into a single stock price.
When public companies don’t like their stock prices, they’re stuck. Before an offering, one can still walk away.
Smart ring maker Oura Inc. was eyeing a roughly $15 billion valuation, but this week pulled the offering citing “uncertainty in the IPO market.” Last week, away from fashion, MGU Bamboo Insurance Services and metal powders producer Amaero postponed their IPOs.
“There’s a high level of uncertainty in the marketplace from a macro standpoint,” said Michael Prendergast, managing director in Alvarez & Marsal’s consumer and retail group. “We’ve got two wars that we’re actively engaged in. You can’t turn the television on and not hear at least 15 to 20 minutes of someone droning on about AI. Then the fashion sector has always had a very fickle relationship with IPOs and with Wall Street.
“Reformation, that should be great and it’s just kind of lagging along and you’re scratching your head,” he said.
Shares of the sustainably minded brand Reformation were priced at $15 when it went public, the low end of its projected range, and have since fizzled to under $13.
The market overall is still near its high, but who knows where the future leads?
That’s an uncertainty that both public and private companies have to deal with, but it’s a problem that becomes most pressing while moving from one world into the other.
“There is a quiet discussion of, now that tariffs have kind of leveled out, what does that mean for next year?” Prendergast said. “A lot of brands raised their prices. They then were the benefits of inflation being passed on to their customers, which resulted in higher comps. They did that with lower inventory bases as well.
“That was a nice bump this year,” he said. “The other thing is you won’t have the tariff refund benefit next year. In the short term — and IPOs are all about short term — the uncertainty is outweighing the conviction of the markets.”
Whether a window opens for Authentic or Alo or Vuori or Skims remains to be seen, even as the businesses stand out over their peers.
“Are those companies different? Absolutely. Should Alo be wildly successful? One hundred percent,” Prendergast said. “The story is yet to be told of whether the investors reward them or not — and how long it takes.
“The companies that I’ve seen with a successful run, it’s all about them having the fortitude, the conviction to do what’s right for their brand and their business,” he said.
So the world’s going to do what it’s going to do, but brands and CEOs and everyone else can still decide how they want to move through that world.
The Bottom Line is a business analysis column written by Evan Clark, deputy managing editor, who has covered the fashion industry since 2000.
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