Consumer & Retail Q4 2022

Industry Trends

Inflation Shows Signs of Easing in Q4

Following a year of rapidly increasing prices, inflation eased in the last quarter of 2022. The Consumer Price Index rose 0.1% in November, with a 0.4% increase in October. Year-over-year, the index increased 7.1% before seasonal adjustments, the slowest 12-month pace since December 2021. The easing inflation comes as the Federal Reserve continues to pursue rate hikes, increasing rates at the fastest pace since the 1980s.¹

U.S. Consumer Confidence Rises in Q4

The consumer confidence index, which measures U.S. consumers’ attitudes, buyer intentions, and consumer expectations for inflation, stock prices, and interest rates, rose in December to 108.3, following declines in November and October. Consumer confidence in December is at the highest level since April 2022. The increase is from consumers’ favorable outlook on the economy and job market, in addition to inflation expectations which have declined to their lowest level since September 2021.²

Budget-Constrained Consumers Generate Drop in Retail Spending

Retail spending in November dropped 0.6% from the preceding month, the most significant monthly decline this year, per the U.S. Commerce Department. Retail sales grew 6.5% year-over-year, the slowest yearly growth since December 2020. The decline is a result of budget-constrained consumers with holiday-related purchases, home projects, and autos choosing to hold back spending. Meanwhile, spending on everyday items, such as food and healthcare products, increased in November, signaling consistent demand for services amid rising prices.³

Kroger and Albertsons Companies to Merge in $24.6 Billion Deal

Kroger and Albertsons Companies announced a definitive agreement to merge in October. Under the agreement, Kroger will acquire all outstanding shares of Albertsons at $34.10 per share for a total enterprise value of $24.6 billion, including the assumption of ~$4.7 billion in net debt. The combined supermarket behemoth would have $209.8 billion in annual revenue and $11.6 billion in EBITDA. In addition, Albertsons Companies is preparing to form a spin-off company, SpinCo, to operate as a standalone public company which is estimated to keep 100 to 375 stores, subject to the store divestiture process, as well as pay a special cash dividend of up to $4.0 billion to its shareholders. ⁴

Largest Transactions Closed

Target
Buyer
Value($mm)

Terminix Global Holdings, Inc.
Rentokil Initial plc
$7,716.74
Tenneco Inc.
Apollo Global Management, Inc.
$7,566.85
Substantially All of the Assets of Peninsula Pacific Entertainment LLC
Churchill Downs Incorporated
$2,750.00
The Mirage Casino-Hotel LLC
Seminole Hard Rock International, LLC
$1,075.00
SuperATV, LLC
Dorman Products, Inc.
$589.65
Island Global Yachting LLC
MarineMax, Inc.
$580.00
Varroc Lighting Systems, Inc.
Compagnie Plastic Omnium SE
$511.06
Four Seasons Resort and Residences Jackson Hole
Host Hotels & Resorts, Inc.
$315.00
Ned Stevens Gutter Cleaning & General Contracting, Inc.
The Jordan Company, L.P.; Cobepa S.A.
$280.00
Orscheln Farm and Home LLC
Tractor Supply Company
$274.00

Other Financial Buyer Transactions Closed

Target
Buyer
Value($mm)

Four Seasons Resort Scottsdale at Troon North
Braemar Hotels & Resorts Inc.
$268.80
StoneMor Inc.
Axar Capital Management LP
$121.30
Pan Pacific Hotels and Resorts Seattle Limited Liability Co
KHP Capital Partners
$70.00
Hotel Monaco Denver
Crescent Real Estate LLC
$69.74
The Muse hotel
The Chartres Lodging Group, LLC
$49.50

Other Strategic Buyer Transactions Closed

Target
Buyer
Value($mm)

SIRATA BEACH RESORT LLC
Columbia Sussex Corporation
$207.00
Pala Interactive LLC.
Boyd Interactive Gaming, L.L.C.
$170.00
CarLotz, Inc.
Shift Technologies, Inc.
$169.70
Four Seasons Hotel Nashville
GD Holdings LLC; Stonebridge Development Co.; Copford Capital Management LLC
$165.00
Certain Assets of Electric Last Mile Solutions, Inc. and Electric Last Mile, Inc.
Mullen Automotive, Inc.
$105.00

Data Assumptions

This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

Glossary

EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
LTM - Last Twelve Months
TEV - Total Enterprise Value

Sources:

Guilford, Gwynn. "U.S. Inflation Eased in November, CPI Report Shows." The Wall Street Journal, 13 December 2022.
"US Consumer Confidence." The Conference Board, 21 December 2022.
Torry, Harriet. "Retail Sales, Manufacturing Declines Point to Slowing Economy." The Wall Street Journal, 15 December 2022.
"Kroger and Albertsons Companies Announce Definitive Merger Agreement." Albertsons Companies, 14 October 2022.

Consumer & Retail Q4 2022

Industry Trends

Inflation Shows Signs of Easing in Q4

U.S. Consumer Confidence Rises in Q4

Budget-Constrained Consumers Generate Drop in Retail Spending

Kroger and Albertsons Companies to Merge in $24.6 Billion Deal

Largest Transactions Closed

Other Financial Buyer Transactions Closed

Other Strategic Buyer Transactions Closed

PCE Transactions

Contacts

Joe Anto

David Jasmund

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Consumer & Retail Q4 2022

Industry Trends

Inflation Shows Signs of Easing in Q4

U.S. Consumer Confidence Rises in Q4

Budget-Constrained Consumers Generate Drop in Retail Spending

Kroger and Albertsons Companies to Merge in $24.6 Billion Deal

Largest Transactions Closed

Other Financial Buyer Transactions Closed

Other Strategic Buyer Transactions Closed

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PCE Transactions

Contacts

Joe Anto

David Jasmund

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