apparel business for Sale

DTC, wholesale, and retail are three different businesses. A brand that's 100% direct-to-consumer through its own website has high gross margins (typically 60–70%) but high customer-acquisition costs. A wholesale brand selling to retailers has lower gross margins (35–50%) but predictable bulk orders. A vertically integrated brand with its own retail stores has the highest margins but also the highest overhead. Identify the channel breakdown clearly. The business operates very differently depending on the mix.

Apparel doesn't age well. Last season's inventory is worth less than this season's. A brand sitting on $1M of unsold goods from prior seasons isn't worth $1M of inventory value — it's worth what those goods will sell for at markdown. Walk through the warehouse and review inventory by season and SKU. Anything more than two seasons old should be valued at clearance pricing or written off entirely. The seller's balance sheet may be optimistic.

Trademarks, designs, customer lists. What you're really buying in an apparel acquisition is the brand: name, logos, registered trademarks, design library, customer relationships, and the position the brand occupies in the customer's mind. Verify trademark registrations in all relevant countries (not just the U.S. — if the brand sells internationally, foreign trademarks matter). Confirm assignment of designs in the asset purchase agreement explicitly.

Factory relationships are personal. Most independent apparel brands work with a handful of factories (domestic or overseas) on a relationship basis — not formal contracts but ongoing trust, payment terms, capacity commitments. These relationships transfer to the buyer but not automatically; factories will want to know who's running things and may tighten payment terms or production capacity during transition. Get introductions to the top 3–5 factories before close.

The cash cycle is brutal. Apparel brands typically pay manufacturers 60–120 days before goods sell. Wholesale customers pay 30–90 days after delivery. The working capital gap can be 4–6 months of revenue. A brand with $5M in revenue may need $1M–$2M in working capital just to operate. Verify the financing structure (bank lines, factor relationships, owner-funded working capital) and ensure it transfers or that you have replacement financing arranged.

Customer acquisition costs have climbed substantially. Facebook/Instagram CAC has roughly doubled or tripled over the past five years; TikTok offers cheaper acquisition but smaller scale. A DTC apparel brand whose customer acquisition cost was $25 three years ago may be at $60 today, eating margin. Look at the trend, not just the current level. Strong organic and social presence is increasingly the difference between profitable DTC and unprofitable DTC.