2012 Retail IPO Outlook

2011 provided positive signs for the retail industry. Now, the question at hand is whether there will be continued growth for the industry or certain segments in 2012.  2011 started with the return of the luxury shopper and continued with positive growth for apparel, big box, toys, and a few other segments.  We also saw some healthy activity in the public markets from retailers.  By mid-year, we had seen Teavana, Dunkin Donuts, and Chef’s Warehouse finalize their IPO’s and see strong stock performance.

2011 ended with luxury retailers capitalizing on the recent consumer trends with their own IPO’s, including Michael Kors, Prada and Coach.  These transactions seem to have very good timing as market analysts are predicting a continuous growth in high-end consumer spending over the next 8 to 10 years. Our recent IPO Outlook Survey found that bankers predict a 6 percent increase in the number of U.S. IPOs overall in 2012, but just 23% expect the number of retail IPOs to increase over last year. Still, last year’s activity could foreshadow an interesting year ahead for retail.

Which retailers could enter the public markets next?  We have received numerous inquiries from the marketplace about which retailers may be on the verge of a public offering and the best timing for these offerings.  Some retailers may try to go effective as early as Q1 2012 in order to leverage positive holiday sales. We expect retailers will also seek markets outside of New York. As with Michael Kors, retailers and consumer companies may find capital in the increasingly popular Hong Kong market.

If the markets can realize some degree of stability, retailers may be at the leading edge of a curve where consumer confidence growth fuels the market’s interest in retail public offerings, resulting in a steady flow of deals over the course of 2012.