FASHION’S RECENT WINNERS AND LOSERS
Byline: Thomas J. Ryan
NEW YORK — If the thunderous success of his two main men’s wear competitors — Tommy Hilfiger and Nautica Enterprises — is any indication, Ralph Lauren will have a lot of sunny days ahead as a Wall Street player.
Hilfiger, which went public in September 1992 at 7 1/2 (adjusted for a two-for-one split), has since skyrocketed, closing at 53 Wednesday. Nautica Enterprises, which went public way back in 1971 at 50 cents a share, adjusted for several stock splits, closed Wednesday at 25 1/8.
Despite some recent — and well-known — disappointments among fashion IPOs, there have been a number of stellar performances. They include Gucci Group NV, St. John Knits, Kenneth Cole Productions, Jones Apparel Group, Fila Holdings and Estee Lauder.
Saks Holdings, the parent of Saks Fifth Avenue Inc., also has been respectably received since going public last May.
There have also been more than a few clunkers: Donna Karan International, Mossimo, Designer Holdings and Guess.
Karan’s IPO in June 1996 was initially warmly received by the stock market. The offering priced shares of Karan at $24 each on the New York Stock Exchange — above its projected range of 20 to 22 — and the stock surged to a high of 30 1/8 in its first day of trading. Shares, however, have since fallen following a series of problematic developments, including a restructuring of the company’s cosmetics business and the failure to complete a jeans licensing agreement with Designer Holdings.
Karan closed at 9 7/8 Wednesday.
Mossimo and Designer Holdings — which holds the license for Calvin Klein jeans — also burst out of the IPO gate with strong early results, but have since plunged, primarily on concerns by Wall Street about their earnings.
Mossimo went public in February 1996 at 18 and zoomed as high as 50 1/8, but closed Wednesday at 7 5/8. Designer Holdings, which went public in May 1996 at 18 and sprinted to a high of 34 in that month, closed Wednesday at 8 5/8.
Like Karan, both were initially well received. Each was priced $2 above its projected price range; Mossimo’s first trade was $7 above its offering price, and Designer Holdings was $6 above.
Guess was the first fashion IPO to suffer both a rude reception and shabby treatment thereafter. The company originally wanted to sell 9.2 million shares at $21 to $23 each, but was able to sell only seven million shares at $18 each. The stock closed Wednesday at 10 5/8.
While some Wall Street players have been burned by those stocks, Gucci has continued to shine since going public in October 1995 at $22 a share. The stock closed at 75 3/8 Wednesday, meaning that buyers at the company’s IPO price have earned a 340 percent return.
Gucci’s IPO was so strong that it was able to come back in March 1996 to float a $1.2 billion secondary offering that led to the sale of the remaining stake of Investcorp, its former parent. In the IPO, Investcorp earned $229 million, while Gucci itself raised $280.3 million.
Gucci has been helped by eye-popping figures. Net profits more than doubled last year to $168.4 million from $82.9 million, while sales expanded 76.1 percent to $880.7 million.
Saks Fifth Avenue, which continues to be controlled by Investcorp, went public at 25 in May 1996 and closed Wednesday at 31.
Estee Lauder, another recent winner, closed Wednesday at 47 1/2, more than double its offering price of 22 in October 1995.
More seasoned winners included St. John Knits, whose stock has surged from its March 1993 IPO of 8 1/2 adjusted for a stock split, to close at 43 1/8 Wednesday. Jones Apparel Group, whose May 1991 IPO was priced at $7 a share adjusted for a split, closed at 39 3/8 Wednesday. Kenneth Cole Productions, which went public at $6 adjusted for splits in June 1994, closed Wednesday at 19 3/8. Fila Holdings, priced at $18 adjusted for splits in its May 1993 IPO, closed Wednesday at 51 1/8.