Friday, 4 June 2010

Prada Rumours Of An IPO - 4/6/10

There have been murmurings of Prada considering an Initial Public Offering for some time now. After four attempts in 10 years, is this a case of the boy who cried lupo (wolf)?

Prada have had phenomenal success lately when their “first-quarter earnings before interest, taxes, depreciation and amortization surged to 64 million euros ($78.5 million) from 11 million euros a year earlier.” The company revenue also rose 26 % percent, with a 62% gain across the Asia Pacific region.

We have to wonder whether the institutional market will take the company seriously this time, whilst Prada spokespersons claim the company ‘continue to monitor market conditions’, with no further comment. Earlier this year Prada was involved in further confusion about a rumoured share purchase by Richemont.

On the other side of the court, we have William Susman, the Retail investment bank Financo Inc’s President and Chief Operating Officer, who claims the retail world to be "over-branded, over-stored and over-priced."

Susman stated his strong doubt that many established luxury brands would attempt to go public. Instead Susman noted that “any IPOs in the sector will come from buyout firms looking to cash out on their investments.”

In a market where the luxury consumer is not yet fully known, Susman made it clear that the IPO market is not ready for a luxury brand at this stage. We suspect Prada won’t be getting Financo onboard for their advice and preparatory work…

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Melinda O’Rourke is the founder and Director of MO Luxury, a dynamic, Sydney-based management firm specialising in luxury brands and services. Melinda and her associates at MO work with local and international brands across prestige retail, fashion, fine jewellery, timepieces and specialised services. Melinda is well-connected, well-read, and well-versed in the demands of the luxury market and its client base. Her advice is firmly based in objectivity and ultimately, accountability. Melinda offers constructive counsel and both strategic and creative thinking and is able to draw upon a strong network of specialised talent to compliment the MO Luxury team as needed. Melinda enjoys excellent industry relationships and is regularly quoted in the business and fashion media. Read more about MO Luxury,