New research from leading business and financial adviser Grant Thornton UK finds that deal activity in the UK retail sector from the first quarter of the year was marked by strategic mergers and acquisitions, with a focus on future-proofing operations. The beauty sector’s resilience and large corporations’ divestment from non-core operations were key deal drivers.
The firm’s latest Retail M&A review finds that 10 deals were recorded in the first quarter of 2024 – a decline in activity from the last quarter of 2024 (16 deals) and down from the same period last year (15 deals in Q1 2024).
The first quarter of the year saw several deals to expand companies’ brand portfolios and enhance geographic reach to enable future growth.
Examples include:
The challenging conditions and weaker consumer demand in key markets, particularly Europe and China, have caused an uptick in divestments across the luxury sector as brands focus on core operations to maintain efficiency and profitability. Deals from Q1 2025 that demonstrate this include:
A notable exception to the general reduction in luxury purchases is the beauty sector, which remains resilient as consumers continue to prioritise beauty spending.
Skky Partners, the private equity firm founded by Kim Kardashian, took a significant minority stake in UK-based luxury skincare brand 111Skin. Founded in 2012, 111Skin is positioned in the ultra-premium segment. Its flagship product, the Black Diamond 50ml Cream, retails at £600, underlining the brand’s appeal to affluent consumers.
Nicola Sartori, Partner and Head of Consumer Industries at Grant Thornton UK, commented:
“Although there was a decline in deal volumes in the first quarter, part of this can be put down to the distortion in the market the Budget statement in October 2024 created. Sellers rushed to complete deals, which would otherwise have fallen into the first quarter of 2025, so care needs to be taken into reading too much into the drop in Q1. However, there’s still uncertainty and caution among investors and retailers, who continue to be influenced by the ongoing cost of living crisis and wider macro-economic challenges.
"Inflation is currently under control and rates are forecast to come down more quickly through 2025. These factors have played into the ongoing resilience of the debt market and supported the availability of capital for strong businesses. Lender appetite has improved since last year and the competitiveness between them has been shown in decreasing margins, particularly from debt funds.
“There are some headwinds. Banks’ assessment of the potential impacts of tariffs continues to evolve and will vary by business. Lenders are still wary of inflation and other macro-issues and require more data and borrower forecast validations, maintaining a high burden of proof despite the level of increased competition. But overall, we’re cautiously optimistic about the availability of debt into retail.”
Press Release
Retail M&A in first quarter of 2025 focused on future-proofing finds research
21 May 2025
New research from leading business and financial adviser Grant Thornton UK finds that deal activity in the UK retail sector from the first quarter of the year was marked by strategic mergers and acquisitions, with a focus on future-proofing operations. The beauty sector’s resilience and large corporations’ divestment from non-core operations were key deal drivers.
The firm’s latest Retail M&A review finds that 10 deals were recorded in the first quarter of 2024 – a decline in activity from the last quarter of 2024 (16 deals) and down from the same period last year (15 deals in Q1 2024).
The first quarter of the year saw several deals to expand companies’ brand portfolios and enhance geographic reach to enable future growth.
Examples include:
The challenging conditions and weaker consumer demand in key markets, particularly Europe and China, have caused an uptick in divestments across the luxury sector as brands focus on core operations to maintain efficiency and profitability. Deals from Q1 2025 that demonstrate this include:
A notable exception to the general reduction in luxury purchases is the beauty sector, which remains resilient as consumers continue to prioritise beauty spending.
Skky Partners, the private equity firm founded by Kim Kardashian, took a significant minority stake in UK-based luxury skincare brand 111Skin. Founded in 2012, 111Skin is positioned in the ultra-premium segment. Its flagship product, the Black Diamond 50ml Cream, retails at £600, underlining the brand’s appeal to affluent consumers.
Nicola Sartori, Partner and Head of Consumer Industries at Grant Thornton UK, commented:
“Although there was a decline in deal volumes in the first quarter, part of this can be put down to the distortion in the market the Budget statement in October 2024 created. Sellers rushed to complete deals, which would otherwise have fallen into the first quarter of 2025, so care needs to be taken into reading too much into the drop in Q1. However, there’s still uncertainty and caution among investors and retailers, who continue to be influenced by the ongoing cost of living crisis and wider macro-economic challenges.
"Inflation is currently under control and rates are forecast to come down more quickly through 2025. These factors have played into the ongoing resilience of the debt market and supported the availability of capital for strong businesses. Lender appetite has improved since last year and the competitiveness between them has been shown in decreasing margins, particularly from debt funds.
“There are some headwinds. Banks’ assessment of the potential impacts of tariffs continues to evolve and will vary by business. Lenders are still wary of inflation and other macro-issues and require more data and borrower forecast validations, maintaining a high burden of proof despite the level of increased competition. But overall, we’re cautiously optimistic about the availability of debt into retail.”