MILAN — Prada SpA is considering 2011 rather than 2012 for an initial public offering as it seeks to capitalize on its surging profits and sales.
This story first appeared in the November 29, 2010 issue of WWD. Subscribe Today.
A company spokesman confirmed Prada is exploring an IPO, which will “likely take place in 2011, more reasonably in the second half of the year, and depending on market conditions.” After canceling plans for an IPO several times over the past few years, Prada was believed to be penciling in 2012 to try again. It is understood a decision on the exact timing and the location will be made early next year. Sources here say Prada has been mulling a listing on the Hong Kong Stock Exchange, given the company’s performance in the Asia-Pacific region.
Revenues in that area rose 51 percent in the first nine months of 2010. Carlo Mazzi, Prada’s vice president, said earlier this month that “when you have to raise funds, you look around and you go and raise them where the offer is more attractive. Money has no country. Where there is a larger availability of money, that’s where we will go and collect money, but we will use it in Italy.”
Asked if Italy is an attractive market for an IPO, Mazzi said that “if I define finances as a raw material, or as an element of the venture, the collection must be done where there are the best conditions for an offer. The fractionized European market cannot compete with the markets of New York and Asia. Today in Europe we have a plurality of financial markets that does not favor development, or the competition in a global economy.”
Mazzi, however, said no decision has been made yet on the location of an offering.
Chief executive officer Patrizio Bertelli and designer Miuccia Prada control about 95 percent of Prada SpA through Amsterdam-based Prada Holding BV. One of Italy’s main banks, Intesa Sanpaolo, owns the remainder of the company. For this reason, sources believe Intesa will be vying for Prada to list in Milan.
Last week, the Italian luxury goods house said net profits in the nine months ended Oct. 31 surged 205.8 percent to 156 million euros, or $206 million, compared with 51 million euros, or $69.3 million, in the same period last year.
The company said this figure “has already and largely exceeded the profit for the full year 2009.” Prada reported a net profit of 100 million euros, or $139 million, in the 2009 fiscal year.
Dollar figures are converted at average exchange rates for the periods to which they refer.
In the year-to-date period, the group’s global sales grew 31 percent to 1.38 billion euros, or $1.82 billion. Retail sales grew 44 percent, or 23 percent on a like-for-like basis, while wholesale sales gained 9 percent.
The Prada label accounts for 78 percent of total sales, the Miu Miu brand for 17 percent and Car Shoe and Church’s for the remaining 5 percent.
Sales increased 20 percent in Europe and 27 percent in the U.S.
The Prada spokesman said “China is the country that is developing at the quickest pace compared to the rest of the world,” and that “major events” are planned in the Asia-Pacific area next year, including a fashion show in early 2011 in China. The company plans to open 17 stores in China next year and another 11 in 2012.
Last week, Fondazione Italia China, the organization here that promotes business between Italy and China, bestowed one of its yearly awards to Prada for the company’s investments in China and its presence at Shanghai’s Expo, where the company provided uniforms for staff at the Italian pavilion.
Commenting on Prada’s first nine-month results, Bertelli said: “These data confirm that the retail network expansion is a winning strategy.”
Prada has been focusing on developing its retail network, with the aim of generating more than 70 percent of consolidated turnover from directly operated stores next year. The number of stores at the end of October totaled 310.
By the end of the year, the company will have invested more than 100 million euros, or $133.3 million at current exchange, mainly directed at building the retail network.
Prada reduced its debt to 429 million euros, or $566.2 million, at the end of October, compared with 485 million euros, or $693.5 million, at the end of January.
In July, Prada negotiated a three-year loan agreement of 360 million euros, or $480.1 million at current exchange, which will partially go toward funding the company’s retail growth and refinancing long-standing debt.