Fabletics Seen as Attractive M&A Target in the Growing Athleisure Space

Reporting: Emily Fascold, Dayna Fields

Fabletics, a women’s athleisure brand partially owned by Kate Hudson, is attracting attention from the M&A community as a target that is potentially ripe for a buyout, according to sources.

Sources noted that the fast-growing company would be well-positioned to strike a deal this year, given its size and recent growth.

Founded in 2013, Fabletics generated $850 million in revenue in 2024 and is on track to reach $1 billion in sales within the next two years, according to published reports.

On the basis of Fabletics’ financial performance, it could fetch a lower-double-digit EBITDA multiple if it decided to pursue a sale, sources said, pegging a potential valuation at about 10x to 12x EBITDA.

Sources said that finding a growth partner to carry Fabletics to an eventual IPO would make sense for the company, which explored a potential public exit in 2021.

At that time, the company reportedly hired Morgan Stanley, Goldman Sachs, Barclays and Bank of America to help it raise about $500 million via an IPO, although a deal never came to fruition.

Fabletics is owned by TechStyle Fashion Group, which also owns a stake in Rhianna’s Savage X Fenty lingerie brand. Institutional investors include L2 Point Management, Matrix Partners and Sweetwater Private Equity.

The company sells a full range of activewear and swimwear for women but is best known for its leggings, which it sells through a subscription model for $12 per pair. In addition to its direct-to-consumer business, the company also operates more than 100 retail locations across the United States.

Competitors in the activewear space include brands such as Alo Yoga and Vuori – the latter of which raised an investment of $825 million in November from General Atlantic and Stripes, according to a press release.

Both Alo Yoga and Vuori are considered premium brands, with their leggings retailing for about $100, sources noted. While Fabletics has more mid-tier pricing, one of the sources said that its affordability is a compelling draw for investors, as consumers continue to pull back on discretionary spending.

“Fabletics doesn’t benchmark as well as some of its more expensive peers, but at the same time, the fact that it’s a cheaper brand is part of what makes it so interesting because most Americans can’t spend $180 on an athleisure set right now,” the source said. “Their leggings are meant to be worn and tattered, and there’s a big market for that.”

Logical suitors for Fabletics are financial sponsors that could help Fabletics scale ahead of an eventual IPO, sources said. However, Fabletics could also fit in the portfolio of apparel strategics, such as VF Corp., Kontoor Brands and Levi Strauss, they noted.

In January, Fabletics President Ashley Kechter attributed the brand’s fast growth, in part, to its brick-and-mortar retail strategy, noting that it plans to open an additional 20 stores over the next year. Other organic growth strategies for the business include international expansion and its entry into the wholesale retail channel at stores such as Nordstrom.

According to a 2024 retail industry report by Capstone Partners, M&A volume in the apparel and footwear segment is rebounding from sluggish performance in prior years. Transaction volume in the space grew 28.8% in the first half of 2024 compared with the prior-year period.

Fabletics did not return a request for comment.