Claiborne Is Selling Brands, But Why Aren't More Deals Done?

WWD reports today that Liz Claiborne is nearing the sale of four of its brands: Dana Buchman, Ellen Tracy, Sigrid Olsen and Prana. At the Redburn Partners investors luncheon I attended on Wednesday one of the key questions was: Why aren't the big groups buying brands anymore? Simply put, the targets are too expensive. With Coach, even depressed, trading for 4 times sales the only people who would consider an offer are private equity. Tiffany, a much talked about acquisition target is trading at a more reasonable 2.5 times sales. Add to that the fact that all of the big groups are still working on developing strong second brands -- Yves Saint Laurent at PPR/Gucci Group, Fendi at LVMH and Miu Miu at the not-yet-public Prada Group and it just doesn't make sense for them to take on more brands.

One factor that isn't as important is the definition of luxury. Everyone at the lunch agreed that the PPR/Puma deal made sense in the current world of "luxury." A brand like Tiffany might be looked down on by Balenciaga customers, but the value of the company would still make it attractive to the Balenciaga owners.

If stocks continue to decline, then look for LVMH and PPR to get back in the M&A game.