Inspired Home Show Takeaways and M&A Outlook

Baird's Global Consumer team, focused on the Household Products sector, recently attended The Inspired Home Show annual convention in Chicago. Throughout the multi-day conference, Baird was able to connect with key brands in the space to hear the latest market trends and opportunities in household products.

Key Takeaways

	Attendance much better than last year (+~40%), but still below 2019.
	All major retailers (Amazon, Target, Walmart, Costco, Wayfair, etc.) attended.
	Supplier consensus: Q4 2022 was tough as retailers continued destocking. Soft POS due to lower consumer spending on discretionary categories, but still much better than sell-in.
	Q1 2023: started slow, but many retailers now starting to buy at point of sale (POS levels), meaning they are no longer trying to drive down inventory levels. That said, many retailers used to keep 12 weeks of inventory on hand, and now plan to only keep 10 weeks of inventory on hand (so plan to be lighter going forward vs historical levels).
	Although supply chain costs (especially container rates) have reverted back to pre-pandemic levels (and in some cases, lower), for some suppliers the cost of the inventory still needs to make it through the P&L for the next few months. Several suppliers are trying to push higher cost inventory through traditional retailers and discounters, to accelerate the lower margin sales.
	Some companies that have domestic manufacturing were able to take meaningful share last year with the supply chain disruptions – and advertised the benefit to the major retailers, providing higher fill rates and satisfaction.

M&A Outlook

	The “haves” and “have-nots” define the consolidators, several of whom were actively trolling for deals while others are over-leveraged, restructuring and/or focused internally.,
	Many smaller (sub-$10 mm EBITDA) suppliers either in the market or going shortly, following several bumpy years.
	Strong interest (or at least strong initial attention) in companies in the market today given lack of actionable opportunities over past 15 months.

Contact a member of our team:

Robert Rosenfeld
Managing Director
+1-312-609-4971
rrosenfeld@rwbaird.com

Matt Panek
Vice President
+1-312-609-4939
mpanek@rwbaird.com