Could Savers Value Village Save the IPO Market?
The happenings at for-profit thrift store Savers Value Village don’t usually sway the worlds of Rihanna or Kim Kardashian — but this just might be an exception.
Savers, which is controlled by private equity giant Ares Management, went public on Thursday, and in fine form.
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The retailer priced at $18 a share — above the $15 to $17 range first suggested — and then traded up 27.3 percent to $22.91 on Thursday once the stock hit the open market. Add to that the successful offering of Mediterranean fast-casual restaurant Cava Group Inc. this month and last week’s filing for an offering by Oddity Tech, which bills itself as “a consumer tech platform that is built to transform the global beauty and wellness market,” and things could be looking less gloomy when it comes to the IPO market.
All together, it’s not a return to the go-go days of 2021 when Warby Parker Inc., Allbirds Inc., Rent the Runway Inc., On Holding and many others went public — but it just might be a start.
If the market for initial public offerings does open for real, it could be a greenlight for brands that were seen as positioning for an eventual offering, including Rihanna’s Savage x Fenty and Kardashian’s Skims. Also on the sidelines is branding powerhouse Authentic Brands Group, which hit pause on its IPO after agreeing to buy Reebok and just raised another $500 million from General Atlantic.
Certainly a resurgence in the IPO market wouldn’t hurt fashion, and consumers have been holding up better than many feared. But the sudden increase in early-summer IPO activity could say more about the eccentricities that sway Wall Street than anything else.
“The push for IPOs is not a fashion or consumer phenomenon,” said consultant Matthew Katz, managing partner at SSA & Co. “It’s more of a market opportunity, a market timing phenomenon.”
Katz said that in some cases the investors who bought into the sector at big multiples years ago have simply reset.
“They had great expectations and so some of these are now coming to the point where they’ve got to exit,” Katz said.
IPOs are a way to sell off a position over time and potentially grab some upside should the stock be well received.
The mini wave of IPOs — for now — is also another chance for the market to bet on the consumer space after the Class of 2021 generally hit Wall Street with big expectations and big valuations only to run into the maw of the 2022 slowdown and lose most of their lofty valuations.
Katz said that traders who bet on the consumer market in 2021 might still like the bet and be willing to jump back in with lower prices today.
While the landscape is still uncertain — with inflation, high interest rates, war in Ukraine and a presidential election next year — it might just take a little bit of traction to start the next boom.
“The follow society is pretty strong,” Katz said of Wall Street. “If somebody sees something successfully, we’re always looking at the me-too, ‘How do I get some opportunity with that?’”
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