US apparel and footwear deals surge to record $21B as brands react to tariff pressure

U.S. President Donald Trump’s trade war is helping push U.S. clothing and footwear acquisitions to all-time highs this year, with some companies merging to help offset tariff costs while others go private to weather the next 3-1/2 years of his presidency outside the public market, dealmakers say.

Popular sneaker company Skechers announced a $9.42 billion deal in early May to go private, days after it withdrew its annual earnings forecasts and sent a letter — along with 75 other footwear companies — to Trump, stating that the tariffs were an “existential threat” to the industry.

Sneaker seller Foot Locker, which also signed the letter to Trump, in May accelerated its $2.4 billion sale to Dick’s Sporting Goods. While both deals were in the works for months, bankers and analysts said Trump’s tariffs are creating both chaos and opportunity for retailers and brands to explore tie-ups. This has driven dealmaking in the U.S. footwear and apparel sectors to roughly $21 billion in announced deals year-to-date.

With more than three months left in the year, that figure is already a record, according to LSEG data dating back to the 1970s — particularly surprising for an industry where valuations are not nearly as lofty as those in tech or financial services. The previous record for U.S. apparel and footwear M&A was last year’s $16.1 billion, and before that, 2021’s $15.6 billion, according to LSEG.

“Scale is more important in a tariff-rich environment because you can negotiate better terms across a larger base with many of your counterparties,” said Carmen Molinos, Morgan Stanley’s global co-head of consumer retail investment banking.

Morgan Stanley advised Canadian apparel maker Gildan Activewear on its acquisition last month of U.S. underwear maker Hanesbrands for $2.2 billion.

Both companies produce more in Central America and the Caribbean than in Asia, and primarily use U.S.-grown cotton, which provides them with some protection from tariffs. The combination insulates them more from fluctuating geopolitics, and Gildan was one company looking to get bigger amid the chaos.

“We think that we’re really well aligned to take advantage, actually, of this near-shoring opportunity,” Gildan’s CEO and co-founder Glenn Chamandy said on an August investor call about the deal.

Tariffs were a shock to the system that showed retailers just how quickly their businesses could get disrupted, highlighting the importance of scale, several bankers said.

“In moments of turmoil and change, those who are in a position of strength are looking to build up on those strengths, and if they see the right strategic fit, they’re taking advantage (and buying),” said JPMorgan’s Jonathan Dunlop, co-head of North America consumer and retail investment banking.

This year, JPMorgan advised 3G Capital on Skechers and brand management firm Authentic Brands Group’s $1.4 billion deal last month for Guess. Authentic also picked up Dockers from Levi Strauss, while another brand management firm, Bluestar Alliance, announced a deal to buy Dickies from VF Corp this week.

Brand management firms typically buy a brand’s IP and then license it to operating partners that handle manufacturing, design, and sales.

“The brand management companies have been some of the most prolific acquirers of both middle-market and a handful of multi-billion-dollar retail brands,” said David Shiffman, partner and head of consumer retail at Solomon Partners. The bank advised the special committee of Guess.

Navigating the uncertainty

Going private, as in Skechers’ case, is becoming an increasingly attractive option to navigate the uncertainty without the pressure of public quarterly reporting — especially if companies feel the public market is not valuing them appropriately.

Foot Locker, meanwhile, had been in discussions about a sale since Dick’s Executive Chairman Edward Stack first reached out to rival CEO Mary Dillon in January 2024.

Trump’s April 2 self-styled “Liberation Day,” when he announced sweeping new global tariffs, helped seal the deal earlier than expected, according to an SEC filing. Foot Locker said tariffs were causing the company’s stock to drop and that it was headed for a weaker-than-expected first-quarter earnings report — a development executives feared would further depress shares.

The board decided on May 10 to try to bring “negotiations to a close quickly,” it said in a securities filing. The next four days were a flurry of paperwork and legal meetings before the companies announced their deal — with two weeks to spare before reporting earnings.

Bankers advise watching for more tie-ups later this year as stronger retailers seek deals and struggling companies look for partners.

Private equity firm Bain Capital is trying to offload its stake in Canada Goose, and Lands’ End has received offers from brand management firms.