Fashion Retail Is Tough, Fashion Luxury Brand IPO Myth Is Hard To Create!

Michael Kors has created the myth of fashion listed companies, but the scenery is no longer. Michael Kors shares fell 34% in the past year.

Fashion industry has rarely landed luxury market in the capital market since Jimmy Choo in October last year. Fashion retailing is difficult, and the chance of IPO for fashion luxury brands has become slim.

According to WWD, the second IPO application of retailer Neiman Marcus is in the face of stock crash. It is doubtful whether it will continue to apply. Vince has been exposed in the spotlight of the open market. J. Crew is still struggling as a Private Companies. Belk delayed IPO due to temporary acquisition by Sycamore Partners. Even the rich two generation Michael Kors of fashion finance is losing its high market value.

Wall Street is no longer the promised land of fashion, at least not now.

Why? There are two reasons. One fashion brand brings its craziness into the stock market. Fashion trend Seasonal vicissitudes are often not conducive to investors seeking stable returns. Second, companies do not know what kind of turbulent market and economic environment they are jumping into, which makes it difficult for them to price or provide investors with the value they want.

David Shiffman, general manager of Peter J. Solomon Co. global retail group, said: "look at the fashion retail industry, you will see that this is a very difficult macroeconomic market, and it will become more and more difficult. People are complaining about the economic environment of the United States, probably because the growth has slowed down, but at least it is more stable than Europe and Asia. "

This is the fundamental change brought about by the revived market after the financial crisis.

Shiffman said: "since April 2009, the market has been advancing rapidly in a straight line, but it was two months ago. Steady and sustained growth is the key to winning the market. This is also the path to high valuation. Most of the fashion listed companies have experienced a rapid growth period, and have achieved high economic growth and achieved great improvement in China. This is the situation of many companies. Consumer spending also directly promotes the performance of retail sales.

When entering the market, the company will conduct transactions according to the standards of similar enterprises. Similarly, when an industry is affected, the company may also suffer the same blow, and whether it can get a high estimate is also the same. This year, Michael Kors shares fell about 42%, and Ralph Lauren Corp. shares also hit a new low of 52 weeks last week. After that, Ralph Lauren released news that the founder would leave office CEO, which will be held by Stefan Larsson. Recession, fashion and retail competition are fierce, Quiksilver and American Apparel two. Clothing brand The bankrupt shares will be removed from the NYSE.

Jonathan Eyl, a senior analyst at NASDAQ responsible for enterprise solutions, predicts: "in the future, many IPO may be suspended due to market uncertainty. We haven't seen too many IPO applications in the market. Once you can't see IPO news in the market, it's not good news for people who are considering IPO. "

It seems that IPO is no longer attracting the attention of many companies. They are more interested in private equity investors who want to buy smaller and promising brands and concepts.

According to Dealogic, so far this year, fashion brands, retailers and beauty companies have acquired more than $15 billion (including completed and announced) mergers and acquisitions and unfinished IPO records.

In addition, the clothing retailing industry is under the pressure of the new model: the flow of people in shopping centres is weakening; fast fashion is gaining more market share; digitalization is redefining the relationship between brands and consumers, which poses a serious threat to the physical stores. Italy Luxury brand Prada's initial public offering in Hongkong in 2011 has been betting on the fastest growing consumer demand market in the world's second largest economy, but it is now at a low ebb.

For some electricity supplier companies, the data level may be very optimistic, but for more companies, greater trouble is coming.

The Kenneth Cole Productions brand has been established for 32 years, including 18 years as a listed company. In 2012, the company withdrew from Wall Street, closed down the poor performing stores and removed the women's sportswear product line. Its founder, executive chairman and CEO Kenneth Cole said he needed to make some major changes in order to revitalize the company.

Cole said, "you can't do this as a listed company, and you can't do it all the time when it is disclosed and censored. We have to become a non-listed company.

But IPO still has its advantages: improving corporate image, raising funds for brand expansion, giving back to existing shareholders or creating new stocks as top management benefits. But trading in the stock market can also cause a lot of headaches, from high legal fees and strict daily supervision to the regular scrutiny of shareholders by the SEC.

Only when all business is progressing smoothly and investors can be divided into big profits will these troubles be completely eliminated.

Michael Kors holdings listed at the end of 2011, and its share price surged from $25 to over $101 in just three years, bringing wealth to many people. The listing of Kors has raised tens of millions of people's dreams. All kinds of designers believe that if they can create billions of commercial companies, how much wealth can they get?

However, these dreams are disappearing. There is no doubt that some companies will still be on the road to IPO, but they will be the top companies.

Marc Jacobs may be on the market. He has the support of the brand and Bernard Arnault behind him, and he is still on the road to go slowly.

But any company considering IPO should ask themselves this question. When blue chip luxury retailers like Neiman Marcus find themselves in purgatory, what should they do?

Neiman was owned by Ares management company and Canada Pension Plan Investment Committee. In early August, the company applied for listing again. Within a few days, the depreciation of China's RMB led to global fashion retailing despair.

An anonymous financial source said: "when the yuan depreciated in August, they visited all banks responsible for IPO, and they all agreed that" we need to pay more attention to market dynamics before we can make a decision. "

If Neiman, the most conceptual hype, is caught in waiting, the fashionable luxury brands that are lined up will have to wait for quite a long time.

This year, the industry speculated that four popular fashion luxury brands will be on the market, including Valentino, Tory Burch, Diane von Furstenberg and Versace group. Just last week, according to US media reports, Joel Horowitz, vice president of Diane von Furstenberg, has left. With his departure, some industry insiders believe that this means that the company's IPO plan has been canceled. CEO, a Valentino company, responded to a report from Bloomberg that Valentino was close to the public market, saying that Valentino did not need external financing and was still full of mystery.