E-commerce ripe for consolidation: Financo CEO

By Alexandria Sage

NEW YORK (Reuters) - E-commerce is ripe for consolidation, with smaller companies either merging together or being acquired by larger entities in the near future, said Gilbert Harrison of investment bank Financo Inc., speaking at the Reuters Consumer and Retail Summit on Tuesday.

"They are mostly mid-market deals but they are interesting," said Harrison, chief executive of the firm that specializes in the retail, apparel, footwear and cosmetics industries. Financo is currently involved in the merger between Baby Universe Inc. POSH.O and EToys Direct Inc.

"If you have a successful -- and successful is a relative question -- e-commerce company, the fact that they've survived over the last four or five years and they haven't used up all the capital that they raised at terribly inflated prices means that they are a survivor," Harrison said.

"The question is -- do they survive better as part of a bigger entity?" he asked.

Luxury is another area that will see continued consolidation, said Harrison, who recounted how, on a recent trip to Paris, he witnessed customers lining up 10 deep behind the Hermes counter for leather bags that retail for thousands of dollars.

"I think that the well-to-do consumer is still spending," Harrison said. "I think the up-and-coming consumer has an aspiration to buy either the aspirational luxury goods which are the Coach or the Burberry or to buy the luxury goods whether it's the Louis Vuitton bag or whatever."

And private luxury companies will be sold or be financed, Harrison predicted, adding that he is currently finding financing for furriers J. Mendel and crystal handbag maker Judith Leiber.

In a free-flowing interview covering a range of topics, Harrison said he did not believe that Gap Inc. (GPS.N: Quote, Profile, Research, Stock Buzz) would be sold. The Fisher family, which owns a controlling interest in the global apparel retailer, will "spend the time and the money to fix it. And I think it's fixable."  Continued...