Salvatore Ferragamo SpA has become the third Italian luxury goods company in two weeks to seek a public listing, leaving analysts bullish on investors’ appetite for luxury goods going forward.
Erwan Rambourg, a luxury goods analyst at HSBC Bank in London, said, “The fact that luxury firms are looking to finance expansion by going public is only logical [based on the performance of other recent IPOs]. The success of the L’Occitane listing [in Hong Kong last month] is a good measure of this appetite.”
The Florence-based shoemaker last Thursday announced it has filed documents to list on the Italian Stock Exchange. A source said Ferragamo’s IPO could value the company at around 1.5 billion euros, or $2.1 billion at current exchange.
Experts said Ferragamo’s IPO, set to take place by July, will float a stake of 30 percent to 40 percent, while the firm revealed Mediobanca and J.P. Morgan will act as global coordinator and joint book runners.
Meanwhile, Prada SpA has an estimated valuation of up to $11 billion, while Moncler SpA’s expected 50 percent float is worth about $1.5 billion. Both companies plan to launch their offerings by June.
Recovering equity markets, burgeoning mergers-and-acquisitions activity in the fashion world and strong earnings results for fiscal 2010 appear to be the impetus for luxury companies to launch long-planned IPOs now.
“Once we re-enter growth mode, there becomes tremendous opportunity to grow the brands beyond their core business,” said Marshal Cohen, chief industry analyst at The NPD Group.
Last month, LVMH Moët Hennessy Louis Vuitton bought Italian jeweler Bulgari for $6 billion, while Fung Capital and Jean-Marc Loubier bought 90 percent of shoe label Robert Clergerie.
Ferragamo, which has had to shelve its IPO plans since 2006, hit $1 billion in revenue for fiscal 2010, aided by its direct retail network, which showed a 29.1 percent sales increase. Net profit totaled $80.2 million for the year ended Dec. 31, compared with a loss of $20.4 million in the previous year.
Rambourg said the luxury industry is “looking at sustainable low double-digit growth rates [going forward],” adding that Chinese consumers, who contribute to a quarter of European sales, are a big factor in the boom.