I've previously written about how leading fashion houses are going public and what this means for consumers of luxury goods. But seriously, what exactly is it that's making an increasingly large number of Europe's fashion houses rush for IPOs?
A very interesting article in the Guardian has some answers.
First down the catwalk is likely to be Moschino. Then, over the next few months a string of other big names in the Italian fashion world such as Versace and Armani may go public. Within 12 months, analysts claim, investors should to be able to buy shares on the Milan Bourse in Ferragamo, Prada and the jeweller Damiani. Less certain, but possible, are initial public offerings by Versace and Armani.
So why the rush?
"We are decidedly at a point at which the market prizes the luxury goods sector," says Emanuele Pedrotti, a director of AlixPartners. "There are several firms in the luxury goods business which are heavily indebted and they are taking advantage of this favourable moment to convert their debt into equity."
But that is not the whole story. Many of the 800 or so companies that make up Italy's luxury goods industry have reached a crossroads.
"Maybe the most important [reason for the IPOs] is that a lot of these companies are facing a generational change or need to shift from an entrepreneurial, family-owned business to a more managerial kind of business," says Claudia D'Arpizio, a partner of Bain & Co.
Several of the industry's best known figures — Giorgio Armani, Valentino Garavani and Donatella Versace — rose to global celebrity status on a tide of conspicuous consumption unleashed by the worldwide boom of the 1980s. All of them are now nearing the end of their careers.
Read the full article here.
Photo courtesy for Giorgio Armani: Seriouswheels.com
1 comment:
True most of fashion and luxury firms are thinking of going public.. and i agree that its probably because the founders/family want to exit or take up non-executive roles.
But its not going to be easy.. most of these are closely held and managed companies shrouded in secrecy, have little professional management and no succession plans. Outside talent at senior levels may not be able to work so well either.
I think getting absorbed in conglomerates would be a smoother option (as they have internal access to professional talent in this field and experience in management and trasition of these ateliers) or it should be a gradual process of professionalisation before the founder/family exits.
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