In the short term, transactions in the consumer goods and retail sector are expected to proliferate, but after the 2015 holiday season, the forecast for growth is meager, according to Mergers & Acquisitions’ Mid-Market Pulse (MMP). (See related graphic.)
The sector’s 3-month outlook score of 74.1 ranks significantly higher than the 3-month score of 61.8 for overall M&A. But the 12-month score for consumer goods and retail drops more than 20 points to 54.2, indicating slower growth over the next year.
In addition to macroeconomic issues affecting the whole dealmaking landscape, such as China’s stalling economy, the retail sector is facing its own set of challenges. The Oct. 5 bankruptcy filing of American Apparel Inc. draws attention to the struggles, including “overstoring” in the age of e-commerce. We expect to see more retailers fail after the winter festivities.
The MMP is a forward-looking sentiment indicator, derived from monthly surveys of approximately 250 executives and published in partnership with RSM LLP (formerly McGladrey). Previous sector forecasts include technology, media and telecommunications, health care, energy, manufacturingl and financial services.