Why Tod’s, Superdry Are Fleeing the Stock Market, Seeking Private Life

LONDON — Few things can match the high that comes from ringing the opening bell to mark a company’s stock market debut — except perhaps the enormous sigh of relief that comes when that company is delisted.

When companies go from public to private they do it quietly — there are no rounds of applause, selfies, videos or staff members shaking giant foam fingers and screaming “woo-hoo.” Owners breathe out, take their time to make changes, and may even look to relist their companies, but only when the time is right. 

Now, with a slowdown in consumer demand and inflation and high interest rates squeezing valuations, publicly listed companies ranging from Tod’s to Superdry to Soho House are eyeing the exit door, and looking to return to private ownership.

Whether they need to restructure or raise more money, they’re hoping to make their fixes away from the glare of the public markets.

Amid all the market volatility, the stock exchange “can be a terrible place to live” right now especially for creative brands, family-run firms, or companies that are restructuring,” said Alice Wells, managing director of Lempriere Wells, an investment bank specializing in consumer M&A.

“When the market is unstable, it can be punishing for some companies. You lose access to liquidity and to capital, and it’s just not worth it anymore. This is especially true for creative businesses that need to be thinking for the long term,” Wells added.

According to a recent report from S&P Global, private equity public-to-private deals hit a 16-year high in 2023, chiefly because stock market valuations have been so low. Private market valuations look high by comparison, and companies across a variety of industries have been taking advantage of that disparity to jump out of the public markets and into private equity hands.

Fashion and lifestyle companies, some of which are now trading at a wide gap from the peak levels seen in the past 10 to 15 years, have begun to wonder whether delisting might be their best option. And they’re looking to private equity for help.

Tod’s has already confirmed its intention to delist via a deal with private equity giant L Catterton, while Superdry’s founder and chief executive officer Julian Dunkerton is looking for backers to help him take the troubled high street retailer private. According to the latest stock market filing, he has until March 29 to make an offer or abandon his efforts.

The loss-making Soho House confirmed last month that it’s mulling a “take-private” deal, and has formed a special committee to explore strategic options. 

Swatch Group is also in the mix. Luca Solca of Bernstein recently wrote that taking the Swiss giant private would be cofounder, CEO and chairman Nicolas Hayek’s “lifelong dream.”

Late last year, José Neves was said to be in talks to take Farfetch private, but in the end it was too late. Farfetch, which was fast running out of money, was eventually placed into administration, and later sold to Coupang.  

Industry sources have suggested that Burberry could be next. They argue that pulling out of the London Stock Exchange would give the company the freedom to restructure without facing the scrutiny of the public markets.

Companies have different reasons for going private.

David Belhassen, founder and managing partner of Neo, a private equity firm that specializes in fashion and lifestyle brands, said that in some cases, such as Tod’s, “the market doesn’t recognize a company’s value for whatever reason — whether that’s fear, or the perception that it’s not doing well.” 

“Tod’s has been doing very, very well lately, but the market hasn’t recognized that,” so the owning Della Valle family decided to take matters into their own hands, Belhassen added.

Tod’s revealed earlier this week that fiscal 2023 profits more than doubled to 50 million euros, while sales grew almost 12 percent to 1.12 billion euros.

As reported last month, the Italian group is planning to return to private ownership through a 1.4 billion euro deal with an L Catterton affiliate backed by LVMH Moët Hennessy Louis Vuitton. 

Tod’s move didn’t surprise analysts. The company had already tried, and failed, to go private two years ago, and is now determined  to chart a course beyond the stock market’s…