Tariff chaos spurs record-high footwear, apparel deals

By Abigail Summerville

-U.S. President Donald Trump‘s trade war is helping to 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 of the public market, dealmakers say.

Popular sneaker company Skechers announced a $9.42 billion deal in early May to go private days after it pulled its annual earnings forecasts and sent a letter, along with 75 other footwear companies, telling Trump 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 for some tie-ups.

It has driven dealmaking in the U.S. footwear and apparel sectors to roughly $21 billion in deals announced year-to-date.

With more than three months left in the year, that figure is already a record, according to LSEG data dating to the 1970s, and particularly surprising for an industry where valuations are not nearly as lofty as, say tech or financial services.

The previous record for U.S. apparel and footwear M&A was last year’s $16.1 billion in deals, and before that, 2021 with $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 deal last month to buy U.S. underwear maker Hanesbrands for $2.2 billion.

Both companies produce more in Central America and the Caribbean than in Asia, and mostly use U.S.-grown cotton, giving them 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 can get disrupted and highlighted 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 & retail investment banking.