For the traditional retailers – the brick-and-mortar marquee names – the great digital shift during the pandemic has been a necessity to meet consumers where they want to be met, and to ensure the survival of those firms.
The shift might reap rewards on Wall Street, too, as investors eye a retail landscape that has a bright, digital-connected future.
As reported, Saks – which is the eCommerce-focused spinoff carved out from Saks Fifth Avenue – is mulling a public offering that could come as soon as next year, with a valuation that could top $6 billion.
Read also: Online Arm of Saks Preps IPO
That valuation would come as sales for those eCommerce operations have topped $1 billion, as measured on an annual basis.
A separate, public listing of the eCommerce arm gives retail and institutional investors a “clear” path toward putting their proverbial funds where their mouths are, squarely on the digital efforts of old-guard, brick-and-mortar firms.
The “separate but connected approach” has been gaining supporters. As reported earlier this month, Jana Partners has taken a stake in Macy’s Inc., and wants that retailer to separate its $8 billion eCommerce business from its traditional brick-and-mortar operations. The firm’s digital business has been growing by double-digit percentage points, and Jana has argued that the eCommerce operations would be worth multiples of the entire company’s roughly $7.7 billion market cap.
Read more: Jana Partners Urges Macy’s to Separate eCommerce Business as it Snags Stake in Retailer
Similarly, the sanguine view that would-be investors may take toward the Saks eCommerce operations may be captured in a few key data points: When Saks went private last year, the entire company was valued at about $1.5 billion; the Saks.com spinoff was valued at $2 billion.
Also see: Saks.com to Be ‘Separate But Related Sister’ to Saks Fifth Ave Brick-and-Mortar Stores
Growing by Multiples
The reported valuation, if and when the eCommerce arm goes public, at a reported $6 billion would be multiples above that latter number, pointing to the growth that has been seen over the few short months since the spinoff took place.
Enthusiastic Assumptions
In a sense, Wall Street would be making some assumptions about the future tied to those multiples – sales growth, for example. But investors are also making an implicit bet about the business model, which rests with the connected economy.
Saks still maintains 40 North American Saks Fifth Avenue brick-and-mortar locations. But the spinoff and growth of the eCommerce operations point to an acknowledgment that the connected economy is inextricably linking in-person shopping with mobile commerce.
Recent PYMNTS research, through the Connected Economy Playbook, has found that, for example, 92% of consumers went online to make a purchase in an age where 45% of consumers own six devices across which they transact and conduct daily tasks. Three-quarters of consumers use a connected device to conduct at least one aspect of their daily lives (including shopping).
More details: How Consumers Live in the Connected Economy