Prada Holding (Milan) has again called off its initial public offering, citing poor market conditions. It is the third time in 12 months that the offering has been pulled back, even as ceo Patrizio Bertelli was insisting publicly that the sale would go ahead.
The company is valued by analysts at about $2.5 billion, and perhaps more, but some analysts saw the IPO cancellation as a sign that Prada may have had overly high expectations for the amount of capital it could raise and the price it could command. The company was reportedly expecting to raise about $1.2 billion.
The offering, which the company had announced in mid-May, would have had the fashion house selling 30 percent of itself in an effort to pay down some of its debt. Prada owes about $1.1 billion, mostly through costly acquisitions (including Jil Sander, Helmut Lang, Church's shoes, Azzedine Alaia and Carshoe, plus Fendi, which it later sold to LVMH Moet Hennessy Louis Vuitton) and the expansion of its retail empire. It now owns 150 boutiques in New York, San Francisco, Los Angeles, Paris, Milan and Tokyo, and its much-publicized Rem Koolhaas-designed store in New York's SoHo (which cost an estimated $40 million). It is said the company rang up about $800 million in debt by new-store building and acquisitions alone.
Prada was one of the luxury brand retailers to push ahead aggressively even despite the slump in luxury goods since September 11. One of its chief international rivals, LVMH Mo‘t Hennessy Louis Vuitton, has lost 20 percent of its stock market value in the last year. Gucci has also reported sharp falls in profits in the first quarter.
This was the third time Prada has canceled an IPO launch. Twice in 2001, because of an economic slowdown and the events of September 11, Prada called off its plans.