科顿是私人股权投资公司贝恩资本（Bain Capital）负责消费品牌投资的总经理。有一天，他伸着脖子更近地看了一眼，被标志上的“Arctic Program”吸引了注意。他感到好奇，这是个什么品牌呢？
仿佛是命运的安排，加拿大的投资银行加通贝祥（Canaccord Genuity）不久之后联系了科顿，希望为某客户寻求融资。该客户名叫Canada Goose，是一家位于多伦多的小型冬装厂商。它发展迅速，有进军全球的野心。科顿很快意识到，这就是那些拥有酷炫标志的风雪大衣背后的公司。他飞去了多伦多，与Canada Goose的首席执行官达尼·瑞斯在时尚餐厅North 44进行了晚餐会面。几个月后，贝恩资本收购了Canada Goose 70%的股份。
Canada Goose拥有的两大关键特质，是科顿在投资零售业时所看重的：强大的品牌识别度和独特的市场定位。风雪大衣一直被看作是功能性服装，而不是时髦服装，但Canada Goose设法在让它变得时尚的同时，还维持了优秀的保暖性。这家公司由瑞斯从波兰移民过来的祖父在1957年创立，主要生产雪地服。通过为前往珠穆朗玛峰和南极的探险者提供服装，公司渐渐建立了口碑。演员丹尼尔·克雷格、模特凯特·阿普顿等名流拥趸纷纷为其发声。科顿表示：“你不会去南极洲，不过因为Canada Goose为那些去的人提供了防护，这个品牌值得信赖。”
这次投资给贝恩资本带来了丰厚的回报，也让Canada Goose发生了巨大的变化。Canada Goose在一年前上市，登陆多伦多证券交易所（Toronto Stock Exchange）和纽约证券交易所（New York Stock Exchange），如今股价已经翻番还多，市值达到约35亿美元。在截至去年12月31日的九个月中，Canada Goose的收入增长32.2%，达到3.7亿美元，商品利润率也提升了5.5个百分点，达到57.8%。贝恩资产还持有Canada Goose 44%的股份，如果这股热潮继续下去，他们的回报还将继续增加。而对于Canada Goose而言，他们将1,000美元的风雪大衣卖给全世界高端消费者的梦想也实现了。
在近来零售业的大部分案例中，私人股权投资公司都扮演了恶人的角色，他们堆积债务，把经营者推向毁灭。这不是没有原因的。控股收购公司是业内许多最大规模的破产的幕后黑手。实际上，2012年以来，14起最大规模的零售商破产——按照《破产法》第11章申请破产时的债务来计算——当中有10起都是控股收购公司持有的连锁店。排名第一的是去年9月申请破产的玩具反斗城（Toys “R” Us），其负债高达79亿美元【贝恩资本也持有了该公司的部分股份，其他持有方还包括KKR和沃那多房产信托（Vornado Realty Trust）】。与控股收购公司有关而破产上榜的还包括许多耳熟能详的品牌，例如贝恩资本投资的另一家公司金宝贝（Gymboree，14亿美元债务），还有运动权威（Sports Authority，15亿美元债务）、Payless ShoeSource（10亿美元债务）和玖熙控股（Nine West Holdings，14亿美元债务）。
还有更多公司也在走向破产。Moody’s在今年3月预测称，随着2019年和2020年的到期债务猛增，利率也有所提升，今年又会有一批新的零售商破产。这家信用评级机构目前的观察列表中有18家零售商被评为“不良”——负债评级达到Caa1甚至更差——其中由私人股本持有的公司包括J. Crew、Guitar Center和内曼·马库斯（Neiman Marcus）等。零售业的清算仍在继续。
It was the distinctive patch that caught his attention. Boston was enduring a particularly brutal winter in 2013 when Ryan Cotton began to notice a trend on his daily walk to work near Copley Square: the suddenly growing number of sharp-looking parkas with a logo showing a polar cap surrounded by flaming red maple leaves.
Craning his neck for a closer look one day, Cotton, a managing director overseeing investments in consumer brands at the private equity firm Bain Capital, was intrigued all the more by the reference on the logo to an “Arctic Program.” What was this brand, he wondered?
As fate would have it, the Canadian investment bank Canaccord Genuity got in touch with Cotton soon after in search of financing for a client—a small, Toronto-based winter-wear manufacturer called Canada Goose that was growing fast and had ambitions to go global. Cotton quickly recognized it as the company behind the parkas with the cool patches. He flew to Toronto for a dinner meeting with Canada Goose CEO Dani Reiss at a trendy restaurant called North 44. Months later, Bain took a 70% stake in Canada Goose.
Canada Goose possessed the two key attributes Cotton looks for when investing in retail: a strong brand identity and a unique niche. Parkas had long been seen as functional rather than fashionable, but Canada Goose managed to make them hip while retaining high performance. Founded by Reiss’s Polish immigrant grandfather in 1957 to produce snowmobile suits, Canada Goose established its reputation by outfitting explorers to Mount Everest and the South Pole. Then celebrity fans like actor Daniel Craig and model Kate Upton gave it cachet. “You don’t go to Antarctica, but since Canada Goose outfits people who do, the brand has credibility,” says Cotton.
The investment has been both a grand slam for Bain and a transformative deal for Canada Goose. Since Canada Goose went public just over a year ago, listing its shares on the Toronto Stock Exchange and New York Stock Exchange, the company’s share price has more than doubled—giving it a market value of some $3.5 billion. In the nine months ended Dec. 31, Canada Goose’s revenues rose 32.2%, to $370 million, while merchandise profit margins shot up 5.5 percentage points, to 57.8%. Bain, which still owns 44% of Canada Goose’s shares, is well positioned to add to its returns if the hot streak continues. And for Canada Goose, the dream of selling its $1,000 parkas to high-end consumers globally has been realized.
If this happy tale reads like an exception to the rule—to some extent, it is.
In most stories about retail these days, private equity is depicted as the bad guy—dooming operators by piling on debt. And not without reason. Buyout firms have been behind many of the industry’s biggest bankruptcies. In fact, 10 of the 14 biggest retail bankruptcies since 2012—as measured by liabilities at the time of Chapter 11 filing—were buyout-backed chains. Topping that list is the $7.9 billion filing, in September, of Toys “R” Us (which Bain owned as part of a consortium that included KKR and Vornado Realty Trust). But the roster of buyout busts includes a host of familiar brands such as another Bain investment, Gymboree ($1.4 billion filing), as well as Sports Authority ($1.5 billion), Payless ShoeSource ($1 billion), and Nine West Holdings ($1.4 billion).
More carnage is on the way. In March, Moody’s said it expected a wave of new retail defaults this year, with a surge in debt maturities coming due in 2019 and 2020 and rates on the rise. The credit rating agency’s current watch list of 18 retailers deemed “distressed”—with a debt rating of Caa1 or worse—includes PE-owned names such as J. Crew, Guitar Center, and Neiman Marcus. The retail reckoning continues.
But as the example of Canada Goose shows, private equity investors can offer retailers a huge boost when things go right. PE firms have helped speed up the evolution of dozens of companies in ways that now seem to be helping them stay competitive in the much-changed, Amazon-disrupted landscape.
The bottom line: When you go to your local shopping center, there’s a good chance that the finance whizzes of private equity have had a hand in the empty spaces left by defunct retailers, as well as in the ones that are surviving and thriving. Here’s how they’re reshaping the mall.
对于这种依托于债务的策略，一种实事求是的观点认为，它只是加速了那些注定失败的连锁店的死亡。最近破产的一些零售商很可能就是这种情况。密歇根大学（University of Michigan）商学院和该大学风险投资基金的指导教师埃里克·戈登表示：“其中许多公司无论如何都会停业的。”
确实，近年来失败的零售商都不成比例地集中在商场的服装连锁店中，例如Wet Seal、美国服饰（American Apparel）和Aéropostale。在这个领域，几乎没有公司还在繁荣发展。另一些破产的零售商则没能在网络上迅速提高影响力，这类公司包括运动权威或户外装备供应商甘德山（Gander Mountain）。
也许最大的颠覆性因素在于消费者出乎意料地迅速接受了电子商务，这让他们离开了门店，迫使希望存活的零售商加速技术上的投资。根据美国商务部（Department of Commerce）的数据，电子商务在2017年为零售业的总销售额贡献了13%，而五年前这一比例是7.9%，2007年则是3.2%。去掉食品杂货后，网络零售的销售额所占的比例还会大幅提升。例如，在上个季度，内曼·马库斯的销售额中有34%来自电子商务。
我们很容易把私人股权投资公司当作零售业之殇的替罪羊。不过有必要记住，过去几年里最成功的零售商都由私人股权投资公司持有或曾是如此，并在此过程中变得更好了。它们包括之前提到的达乐公司、折扣店Burlington Stores以及在最火的零售领域家居用品蓬勃发展的大卖场At Home。
私人股本在这方面可以给予帮助，因为控股收购公司会带来大量的专业知识。例如，贝恩资本内部就有从优化供应链运行到选择店面位置等一切方面的专家。而它的大型竞争对手也是如此：Cerberus有一个名为Cerberus Operations and Advisory Co.的管理咨询公司，KKR有个名为Capstone的类似机构，而L Catterton的这种机构名为Vault。这些机构都有着运营方面的专家，包括许多前零售业高管，以及投资银行家和管理咨询师。
另一个例子是Restoration Hardware。私人股权投资公司L Catterton与其他投资者在2008年以1.75亿美元将其私有化，提高了它电子商务能力，撤出了数十家举步维艰的商场。而市场给了公司丰厚的回报：Restoration Hardware在2012年回归股市时，估值达到了5.2亿美元。对四年的努力而言，这个结果并不坏。
还有Burlington Stores，它之前名为Burlington Coat Factory，是贝恩史上获利最多的一次投资。在贝恩专家的指导下，Burlington大幅提高了从供应商那里购买当季商品的效率，从而更好地与T.J. Maxx竞争，给百货公司领域造成了更多的伤害。
私人股权投资公司的投资者会无情地提出客观的观点，评估哪些有用，哪些没用。安永（EY）的合伙人安纳德·拉古拉曼表示：“私人股本的好处在于它能带来资金，做出取消经营品种和关闭门店之类的艰难决策。”许多私人股本的投资并不依赖巨大的转型：他们往往会瞄准那些在同类商品中仅次于最佳的公司——例如BJ的Wholesale Club，就名列好市多（Costco）和山姆会员店（Sam’s Club）之后——但他们又不需要昂贵的彻底变革。这种情况下，一些调整就可以带来巨大的变化。
当贝恩投资Canada Goose时，科顿知道贝恩资本需要谨慎行事。他最不希望的就是搞砸了Canada Goose的成功公式。此外，科顿也向Canada Goose的首席执行官瑞斯保证，贝恩资本会尊重公司的价值观。
不过双方都认为贝恩资本有推动Goose增长的潜力。一旦交易实现，私人股权投资公司就会派遣十余名身经百战的零售业专家帮助指导公司。贝恩的团队帮助Canada Goose解决了供应链上的挑战来应对需求的暴增，增加了批发客户的满意度。尽管对于老牌连锁店而言，选择独立店面可能是个平淡无奇的任务，但对于家族经营的Canada Goose而言，这确实一个重要而不熟悉的工作——而贝恩在这方面可以提供专业的意见。
贝恩推动着Canada Goose与消费者更直接地联系。2014年，Canada Goose的主要对手盟可睐（Moncler）有80%的销售额都来自自己的门店或网站，这些都是利润更高的渠道。而Canada Goose相反，几乎所有商品都是通过批发供应商，如高端的百货商城Barneys New York和Saks Fifth Avenue来销售的。由于贝恩资本力推电子商务和Canada Goose门店，该比例在这一财年至今已经降低到了64%，也是Canada Goose利润提升的重要原因。
贝恩也帮助公司砍掉了那些利润不高的产品，减少了外套的种类，剩下的都是那些生产速度更快的衣服，还扩张了Canada Goose的产品，尤其是增加了针织品，例如650美元的针织衫。加入Canada Goose董事会的科顿表示：“他们的问题不在于不知道自己能做什么，而在于不知道自己应该做什么。”虽然Canada Goose的价格很高，超过了乐斯菲斯（North Face）等品牌，但他们比盟可睐更便宜，后者比起Canada Goose更注重时尚而非功能性。
与此同时，首次公开募股市场也对零售品牌表现冷淡。所以，只有最有前途的公司才能勉强通过考验。过去几年里，这些公司包括Canada Goose、Floor & Décor和At Home，他们都在上市后股价飙升。相比之下，大肆炒作的时尚品牌J. Jill在首次公开募股之后表现惨淡——仿佛是在提醒投资者零售业的风险。上市指数型基金管理公司Renaissance Capital的负责人凯思琳·史密斯表示：“首次公开募股对于不会被亚马逊影响的零售商而言是有用的。”
The classic playbook for private equity is to buy a company using an ample dose of borrowed money, then unlock value either by getting more efficient operationally or selling off units, or both. Typically, the PE investors will look to unload the company after three to five years via a public offering (with the proceeds often used to pay down debt) or a sale. The debt involved acts as a lever that boosts returns when things go well, but it can be an albatross when things are going south. The borrowing can also help finance the large management fees and dividends that often represent a big chunk of a buyout firm’s returns.
An unsentimental view of this debt-powered approach is that it merely hastens the demise of chains that are doomed to fail. Such was probably the case for some of the recent retail bankruptcies. “Many of them would have gone out of business anyway,” says Erik Gordon, a professor at the University of Michigan’s business school and faculty adviser to the university’s venture capital fund.
Indeed, the retail fails in recent years have been disproportionately concentrated among mall-based apparel chains, such as Wet Seal, American Apparel, and Aéropostale, in a sector in which few companies are thriving, or retailers that were slow to build an online presence, like Sports Authority or outdoor-gear purveyor Gander Mountain.
The sheer number of struggling retailers linked to private equity today, however, reflects a burst of optimism about retail in the PE industry more than a decade ago. Between 2006 and 2008—before the global financial crisis tanked the markets and e-commerce hit critical mass—private equity firms sat on record amounts of money pumped in by gigantic investors like pension funds and wealthy individuals. So they went shopping. The rationale was that buyout firms could make a mint by getting retailers leaner—and that soaring real estate prices limited the risk. Chains could always sell well-located stores to raise cash if needed. The result was a historic retail buyout boom: In 2006 and 2007, PE firms made $108 billion worth of acquisitions involving 300 U.S. retailers of various sizes, according to Dealogic. That’s 10 times the dollar value of PE retail acquisitions made in any other two-year period since the 2001 recession. A decade later, the 2016–17 combined deal volume was a mere $13 billion.
A handful of major successes emerged from the cascade of deals in the mid-aughts. Case in point: the $6.9 billion, KKR-led acquisition in 2007 of Dollar General, now the biggest U.S. chain by store count. Dollar General went public again two years later with a hugely successful 2009 offering, and now has a market cap of $26 billion. But a disproportionate number of retailers ended up languishing in PE firms’ portfolios for years.
What went wrong? For all their financial savvy, back in 2006 the big private equity firms proved no better than the retailers themselves in anticipating major changes that would roil retail.
Probably the single biggest disruptive factor has been the consumer’s unexpectedly rapid embrace of e-commerce—taking customers out of stores and forcing retailers who want to survive to ramp up spending on technology. E-commerce generated 13% of total retail sales in 2017, up from 7.9% just five years earlier, according to Department of Commerce data, and 3.2% in 2007. Remove groceries from the equation, and the percentage of online retail sales is much higher. At Neiman Marcus, for instance, e-commerce accounted for fully 34% of sales last quarter.
The seemingly unstoppable ascent of Amazon has forced retailers to deploy better apps, build new state-of-the-art distribution facilities, and reconfigure stores so they can serve as nodes in a distribution network. The move online has simultaneously increased expenses and slashed profit margins across the industry.
That in turn has piled on extra pressure for retailers in private equity portfolios. Carrying a ton of debt while trying to fundamentally -revamp your business is a precarious balancing act. “If you don’t have money to invest online, invest in your store, invest in your people, invest in price, you’re in deep trouble,” says Charlie O’Shea, a senior Moody’s analyst.
The imperative to make their numbers has led many retailers to play it safe, focusing on sure bets and cost savings. That in turn has led to poor service and a lack of merchandise distinctiveness at many struggling chains. All of which is a formula for failure. As Joel Bines, cohead of AlixPartners’ retail practice, puts it: “When it’s not about the customer anymore, you’re dead.”
It’s east to scapegoat private equity for retail’s woes. But it’s important to remember that some of the most successful retailers of the past few years are, or were, owned by PE firms and came out much better for it. That group includes the aforementioned Dollar General; discounter Burlington Stores; and At Home, a big-box retailer thriving in one of retail’s hottest areas—home goods.
What do these successful chains have in common? They’re in corners of the retail world that have thus far remained relatively impervious to Amazon. The “off-price” segment—as represented by the Ross Stores and Marshalls of the world—barely gets 1% of sales online, but it has been physical retail’s biggest success story for the past decade. Dollar stores, meanwhile, have thrived thanks to their bargain-basement prices and their proximity to shoppers.
Having an Amazon buffer is huge. But successful retailers in 2018, says Bain’s Cotton, must also convey with absolute clarity to the consumer what value they offer.
That’s one area where private equity can help because the buyout firms bring expertise galore. Bain, for example, has in-house experts focused on everything from optimizing supply-chain operations to choosing store locations. And the same is true of its big rivals: Cerberus has an in-house management consulting unit called Cerberus Operations and Advisory Co., KKR has a similar group named Capstone, and L Catterton’s unit is known as Vault. These organizations are packed with operational experts, including more than a few former retail executives, as well as investment bankers and management consultants.
When things are going right for a retailer, these SWAT teams can add huge value. Leading up to Dollar General’s 2009 IPO, for example, KKR installed a management team that included a former drugstore CEO and a Starbucks senior exec. And profits soared after the company, under KKR’s guidance, added more private-label products with their higher margins, stripped out duplicative items, and expanded into new geographic markets.
Another example is Restoration Hardware. PE firm L Catterton took it private for $175 million in 2008 with other investors, pushing it to build up its e-commerce capacity and to pull out of dozens of faltering malls. The markets rewarded the firm richly: Restoration Hardware returned to the stock market in 2012 with a $520 million valuation. Not bad for four years’ work.
Then there’s Burlington Stores, formerly known as Burlington Coat Factory and one of Bain’s biggest home runs ever. Under the guidance of Bain’s experts, Burlington became much more efficient in buying in-season merchandise from vendors, helping it better compete with T.J. Maxx and inflicting further pain on department stores.
Private equity investors can bring a ruthlessly objective point of view to evaluating what’s working—and what’s not. “PE is good in that it can bring capital and make tough decisions like dropping business lines and closing stores,” says Anand Raghuraman, a partner at EY. Many PE deals don’t hinge on a big turnaround: Firms will often target a company that’s just below No. 1 in its category—like, say, BJ’s Wholesale Club, which ranks below Costco and Sam’s Club—but also doesn’t require an expensive overhaul. In that kind of scenario, a bit of fine-tuning can make all the difference.
When Bain made its investment in Canada Goose, Cotton knew that his firm needed to tread carefully. The last thing he wanted to do was mess with the company’s successful formula. Plus, Cotton had pledged to Canada Goose CEO Reiss that the firm would respect his company’s values.
And while Reiss was eager to see what he could do with Bain’s capital and support, the CEO had sought reassurances that he’d stay in control of the company founded by his grandfather. Remaining a Made-in-Canada brand, too, was a sine qua non condition for a deal. Both Canada Goose and Bain wanted to avoid exhausting the brand or, worse yet, cheapening it. “It was really important to me that they believe in our core beliefs,” says Reiss.
But both sides saw the potential for Bain to kick-start Goose’s growth. Once the deal was inked, the PE firm deployed more than a dozen of its battle-hardened retail veterans to help guide the company. Bain’s team helped Canada Goose navigate the supply-chain challenges of meeting booming demand and keeping its wholesale clients happy. While matters such as selecting the right locations for Canada Goose stand-alone stores might have been a prosaic consideration for a more established chain, it was a crucial and an unfamiliar exercise for the family-run business—and one for which Bain was able to offer expertise.
Bain pushed Canada Goose to connect with customers more directly. In 2014, Canada Goose’s closest rival, Moncler, got 80% of sales from its own stores or website, which are more profitable avenues. In contrast, Canada Goose sold virtually all of its merchandise via wholesalers like high-end department stores Barneys New York and Saks Fifth Avenue. That is down to 64% of sales so far this fiscal year, thanks to Bain’s push for better e-commerce and Canada Goose stores, and a big reason that Canada Goose’s profit margins are way up.
The Bain team also helped the company pull back on items that were less profitable, narrowed the coat assortment to ones that are quicker to make, and expanded the Canada Goose assortment, notably adding knitwear, like $650 sweaters. “Their problem wasn’t knowing what they could do but what they should do,” says Cotton, who sits on Canada Goose’s board. And while Canada Goose prices are high, above those of say, the North Face, they are below those of Moncler, whose focus is more on fashion than function compared with Canada Goose.
Despite some success stories, no one should expect another feverish private equity surge into retail. And indeed so far in 2018, according to Dealogic data, private equity acquisitions of retailers are below even the anemic pace of 2016 and 2017, and are more on par with levels last seen in the early 2000s.
Retailers of all stripes still have to convince investors that they can now hold their own online. “The e-commerce shakeout is not done yet, and unless there is an easy win in terms of quick fixes that improve margins, PE will avoid retail,” says Wharton finance professor David Wessels.
The IPO market, meanwhile, has cooled to retail brands, so only the most promising companies can squeeze through. In the past couple of years, that group has included Canada Goose, Floor & Decor, and At Home, which have all soared since going public. Shares of much-hyped fashion brand J. Jill, by contrast, have swooned post-IPO—as if to remind investors of retail’s ongoing perils. “The IPOs that are working are by the retailers that aren’t going to get Amazoned,” says Kathleen Smith, principal of IPO ETF manager Renaissance Capital.
As PE pulls back, retail market dynamics are shifting. There are plenty of retailers that might prosper with relatively minor fixes, and that could benefit from the guidance a buyout firm can offer. But the days of $7 billion megadeals, like Sycamore’s buyout of Staples last year, are over—at least for now, say private equity executives. Instead, expect more strategic acquisitions of retailers by other retailers. (Think Walmart buying Jet.com and Bonobos, or Coach parent Tapestry buying Kate Spade.) At the same time, there will almost certainly be salvageable companies in PE portfolios that are allowed to die as firms look to cut their losses and move on.
Private equity won’t abandon the retail sector, agree industry observers. It will just be more cautious going forward. “There’s a right and a wrong side to history,” says Bain’s Cotton. “What we’re living through at the moment is the most tumultuous and transformative period ever [for retail].” That means more risk in retail for companies unable to really stand out from the competition and outflank rivals. Then again, it also means more opportunities.