What have Mike Ashley and Miuccia Prada got in common? They should both take their companies off the stock market.
Gadfly has already argued that Ashley should take advantage of the slump in Sports Direct's share price to take the purveyor of cut-price tracksuits private.
She wouldn't thank you for the comparison, but Prada, who sells $2,000 handbags and $270 robot key chains, should do the same.
Shares in the company have fallen 43 percent over the past year, and are now just about two-thirds of their initial listing price.
Prada initially enjoyed a boost after its float. It also opened stores apace which helped sales growth. Indeed, the shares reached a high of HK$82.3 in March 2013.
But Prada has lost its lustre.
On Friday Prada said net income fell 27 percent to 330.9 million euros ($376 million) in the year to the end of January, the lowest in five years.
And things aren't expected to get better any time soon. The global luxury market is forecast to expand by 2.5 percent this year, compared with an average of over 8 per cent a year between 2010 and 2013, according to John Guy, analyst at Mainfirst.
Demand has slumped as Chinese consumers have reined in spending. Prada is particularly exposed, with 35 percent of its sales last year coming from the Asia Pacific region, excluding Japan, according to Bloomberg Intelligence. It has also been late to invest in online selling, the source of of the industry's growth last year. Prada generates less than 1 percent of sales from the web.
It has responded by curbing store expansion, cutting costs and announcing plans to raise prices in Europe. This painful but necessary work may be carried out more effectively away from the glare of the public markets.
With a net worth of $3.2 billion, according to Bloomberg, Miuccia Prada could afford to buy back the shares. Even assuming a 30 percent premium, the usual uplift demanded by investors, buying the outstanding shares would cost about $2 billion. It also has little debt: net debt stood at 114.8 million euros ($130.4 million) at Jan. 31, 2016.
Just 20 percent of Prada's shares are publicly listed, and the company said on Friday it will stop publishing quarterly earnings outside of full- deand half-year periods. So arguably it's run like a private company anyway.
But the move would send an unfortunate signal to investors in luxury goods groups -- and those companies contemplating coming to the market in future.
Performances have been mixed for those that listed over the last few years.
Shares in Jimmy Choo are trading below their October 2014 debut price. Others have done better. Shares in Salvatore Ferragamo and Brunello Cucinelli have each more than doubled since their listings in June 2011 and April 2012 respectively. Moncler is 40 percent higher than its debut.
The industry slow-down means there is a dearth of new listings slated for this year. Versace is a potential IPO candidate, although it recently played down the prospects of an imminent issue. Valentino could come to market, but probably not until 2017 at the earliest.
In an already difficult environment a Prada return to private hands would make luxury IPOs even more unfashionable.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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