Bear Markets Wear Prada

Author:
Publish date:

Uh-oh. For the fourth time in a decade, Prada is considering an IPO, according to Bloomberg. We remember all too well the last time this happened—in 2002. The markets promptly the beat a hasty retreat—five years backward, to 1997 levels. The dollar declined to historic lows against the euro.
Prada blames the declining markets for their cancelled IPOs but would be investors are lucky they were scrapped. When the company first considered a public offering, analysts valued it at as much as 8 billion euros. Now they’re saying it’s worth between 3 and 4 billion. As Portfolio’s Felix Salmon points out, This decline came at a time when the 14-member Bloomberg European Fashion Index has more than doubled since 2002.
So what happened? To begin with, Prada made two costly acquisitions in 1999 that now look like serious mistakes.
“Jil Sander and Helmut Lang were disasters for Prada,” Fashionista’s Faran Krentcil tells us.
Another challenge has been the crowding of the market niche that Prada once dominated. The list of Prada competitors is far longer than it was in 2001. Brands like Burberry, Marni, and Marc have all made huge strides in what our Fashionista sisters call “quirky chic”
“Prada used to own that aesthetic,” Faran says.
Prada Seeking Advisers for Luxury IPO, People Say [Bloomberg]
Prada's Underperformance [Portfolio]

Related