The IPO market seems to be perking up, and brands like Alo Yoga might want to strike while the iron is hot.
Private equity has $2.49 trillion ready to invest, S&P Global Market Intelligence Global reported in July. But higher U.S. interest rates and growing regulatory scrutiny worldwide might be holding back dealmaking activity, according to Andrea Guerzoni, EY global vice chair for strategy and transactions. Deals are still getting done even if they’re a bit complicate, she said.
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A favorite of celebrities from Taylor Swift to Kendall Jenner, Alo Yoga is owned by “Color Image Apparel,” based in Montebello, Calif., just 8 miles east of downtown Los Angeles. Alo Yoga’s founders Danny Harris and Marco DeGeorge are believed to have hired Moellis as its investment banker in talks that could put a $10 billion valuation to the Vuori and Lululemon rival. A spokeswoman for Moellis declined comment. Although Color Image Apparel has been around since 1992, Alo Yoga only got started in 2007. Executives at Color Image Apparel, which also owns made-in-L.A. basics brand Bella + Canvas, could not be reached for comment.
Even when the economic climate isn’t ideal, good companies with promising growth potential can find a way to make things happen.
New brands such as Alo Yoga embrace social sports to gain market share. That helps them compete against existing heavy hitters such as Lululemon. A TD Cowen report said the focus on social sports such as tennis and golf puts Lululemon entering the category that it refers to as “play.” TD Cowen analyst John Kernan said new premium players such as Alo Yoga, Vuori and Rhone are the ones to watch.
“Alo growth has been outpacing the market and the future looks bright,” said Matt Powell, former NPD analyst and current head of Spurwink River, an advisory focused on retail, merchandising and marketing.
Powell also likes how Vuori has distinguished itself by using woven fabrics versus competitors that use more traditional knits.
Vuori is believed to be eyeing an initial public offering (IPO) next year. A spokeswoman earlier this month declined comment when asked about financial plans.
Not every company wants to be inside the proverbial glass fishbowl that’s under the constant scrutiny of public investors. However, a public offering can bring a company more funding. It also gives public firms equity that can be used to help fund future acquisitions.
Vuori attracted a $45 million investment from Norwest Venture Partners in 2019, followed by a $400 million investment from SoftBank Vision Fund 2 in 2021 that valued the clothing company at $4 billion. The company also has been working on its sustainability profile. Even more notable is that Vuori has been profitable since 2017, a feat not many startups can lay claim to, and not even by some targeting an IPO.
