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David Jasmund

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Industry Trends

Luxury Retailers Gain Momentum

In 2021, luxury retailers repeatedly beat earnings estimates and maintained strong financials due to cost-cutting measures to increase efficiency during the pandemic. With consumers resuming in-person work, spending on leisure activities, and venturing out of their homes, luxury retailers expect the strong sales momentum to continue in 2022. Although high inflationary pressures hurts low-to-middle income households, the target audience for these goods is wealthier consumers.1

Consumer Confidence Ticks Up

Consumer confidence trended downward in Q1 as inflationary pressures increased. However, confidence in the current and short-term business conditions and improved labor market showed an uptick in the Consumer Confidence Index in March to 153.0 from 143.0 last month. Inflationary pressures and geopolitics will likely test consumer confidence in the coming months. Still, with a strong labor market and continued economic growth, confidence may bounce back to pre-pandemic levels.2

Inflation Hits Record High

After major supply chain shocks and a pandemic, the CPI index increased to 7.9%, its most significant 12-month percent change in more than four decades. Increases in energy, shelter, and food indexes largely contributed to the increase. The monthly increase in January was 0.6%, and February saw an increase of 0.8%, eclipsing the same months in 2021. These significant increases have been a critical issue for the Federal Reserve, which increased interest rates by a quarter percent in March and signaled future increases are likely.3

U.S. Auto Sales Fall

With a shortage of new cars and trucks, auto sales are expected to fall 18% for the entire quarter compared to the same period in 2021. The fall, primarily driven by the global semiconductor shortage, persisted throughout 2021 and is likely to continue throughout 2022 and possibly 2023. Automobile's electronic components have become ever more reliant on chips, putting the auto industry into competition with large consumer electronics for the scarce chips.4

Americans Ready to Spend

Despite high inflationary pressures, U.S. consumer spending on travel and events has continued into 2022. Companies such as Disney, Aramark, MGM, and Airbnb expect that 2022 will continue to see consumer spending increase and bookings surpass pre-pandemic numbers. Executives remain confident that demand will continue growing as it did in late 2021 under similar inflationary pressures.5

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Financial Services Segment of Adtalem Global Education Inc.
  • Wendel; Colibri Group
  • $1,000.00
  • Del Taco Restaurants, Inc.
  • Jack in the Box Inc.
  • $845.67
  • 27-Hotel Portfolio of NewcrestImage, LLC
  • Summit Hospitality JV, LP
  • $823.74
  • Sunshine Fitness Growth Holdings, LLC
  • Planet Fitness, Inc.
  • $800.00
  • Flyers Energy, LLC
  • World Fuel Services, Inc.
  • $777.83
  • The Intimidator Group
  • The Toro Company
  • $401.48
  • Casper Sleep Inc.
  • Durational Capital Management LP
  • $375.41
  • W Nashville
  • Xenia Hotels & Resorts, Inc.
  • $328.70
  • Kimpton Hotel Van Zandt
  • Host Hotels & Resorts, Inc.
  • $242.00
  • InfoSec Institute, Inc.
  • Education To Go
  • $190.80

Other Financial Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Ritz-Carlton Dorado Beach Hotel/14 Luxury Residences Adjacent to Hotel in Puerto Rico
  • Braemar Hotels & Resorts, Inc.
  • $187.70
  • AC Hotel by Marriott Fort Lauderdale Beach
  • Dynamic City Capital
  • $74.30
  • Canoo Inc.
  • Bank J. Safra Sarasin AG
  • $68.57
  • Tranquility Bay Beach House Resort
  • DiamondRock Hospitality Company
  • $62.30
  • Hyatt Place/Hyatt House Hotel in North Scottsdale
  • KKR & Co. Inc.; Riller Capital
  • $54.50

Other Strategic Buyer Transactions Closed

  • Target
  • Buyer
  • Value($mm)
  • Retail fuel and convenience store sssets of Consumers Petroleum of Connecticut, Inc.
  • Global Partners LP
  • $151.00
  • Hyatt Centric Chicago Magnificent Mile
  • Northwestern Memorial Healthcare Corporation
  • $67.46
  • The Standard hotel and spa in Miami Beach
  • Nomade Lido LLC
  • $62.00
  • Violet Grey Inc
  • Farfetch Limited
  • $44.40
  • The Hotel @ Times Square
  • Premier Hotels LLC
  • $41.20

 

Source S&P Capital IQ as of 4/6/2022 and PCE Proprietary Data

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PCE Transactions

Contacts

Contacts

Joe Anto

Orlando Office

407-621-2141 |

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David Jasmund

Orlando Office

407-621-2111 |

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Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

  1. Shaw, Katherine. "Why 2022 may be a good year for luxury stocks." 2022 Stock Market Outlook, Fidelity, 5 Jan. 2022.
  2. The Conference Board. "Consumer Confidence Rebounds Slightly in March" Economic Indicators - Consumer Confidence, The Conference Board, 29 Mar. 2022.
  3. Bureau of Labor Statistics. "Consumer Price Index – February 2022." News Release, U.S. Department of Labor, 10 Mar. 2022.
  4. Henry, Jim. "Auto Sales Fall Again in March; Chips Are Down, Prices Are Up." Cars and Bikes, Forbes, 23 Mar. 2022.
  5. Feurer, Will. "Americans Are Emerging from the Pandemic Ready to Splurge on Events and Travel." Business, Wall Street Journal, 17 Feb. 2022.
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