Michael Kors, an upmarket fashion and accessories brand, has launched the biggest-ever public offering in US fashion, selling more shares than expected in a deal that will value the company at nearly $4bn.
The New York flotation surpassed the $882m offering of Ralph Lauren in 1997, according to Dealogic, despite growing concern over the resilience of luxury spending. The shares will begin trading on Thursday.
The deal was heavily oversubscribed and priced at $20 a share, above the projected range of $17 to $19. Investors in the company sold 47.2m shares, more than the 41m initially offered and raising $944m. The sale valued the company at $3.8bn.
Michael Kors is a high-profile brand in the US, where it earned 89 per cent of its $758m revenue in its past fiscal year, but it wants to expand its presence in Europe and Asia, where it lags behind rivals such as Coach, Burberry, Hermès, Louis Vuitton and Marc Jacobs.
At the IPO price, Michael Kors’ valuation is equal to 44 times its net earnings in the past four quarters, compared with Burberry’s valuation of 24 times trailing earnings and a multiple of 19 at Coach.
Material World
Vanessa Friedman blogs on the fashion/luxury industry from both a corporate and consumer point of view
Stacey Widlitz, an independent retail analyst, said: “It’s coming to the market at a time where we’re questioning the rate of growth in luxury, so the valuation ... is quite expensive compared to peers.”
Luxury has been one of the most resilient parts of retail since the global financial crisis, thanks to the continued spending of well-off consumers but in recent months stock market volatility and the eurozone crisis have raised concerns over whether they will retrench. “The idea is to get this IPO in before we see any downturn in luxury,” said Ms Widlitz.
