Market Pulse | Prada and Ferragamo Hit the Stock Market

Savigny Luxury Index June 2011 | Source: Savigny Partners

LONDON, United Kingdom The M&A and IPO scene in luxury goods and fashion continues to storm ahead. This month’s Market Pulse reveals a redefined Savigny Luxury Index which now includes Italian fashion powerhouses Prada, and soon, Salvatore Ferragamo.

Big news

• Two very high-profile IPOs: Prada listed in Hong Kong on 24 June and Salvatore Ferragamo listed in Milan on 29 June.  Both pulled off their IPOs amongst tricky conditions with high levels of IPO pullouts since the beginning of the year both in Asia and in Europe

• Stripping out Prada, which caused an artificial jump in the SLI, the SLI decreased by 2 percent; still outperforming the MSCI which decreased by 3.2 percent.  Despite concerns over rising interest rates in China, the luxury sector (along with internet stocks) has been seen as a safe haven for investors as the global economic outlook is marred by a looming debt crisis in the USA and in certain European countries

• Continued strong M&A activity: Kurt Geiger, Moncler and Uriage were all snapped up during the month

Going up

Hermès’ share price is at a new high, closing above 200 euros a share on 30 June, raising questions as to whether LVMH is scooping up more shares or whether third parties are betting on further actions from Mr. Arnault or the Hermès group

• European luxury stocks rallied at the end of June as investor concerns over the impact of the Aegean debt crisis on the Eurozone were allayed by the announcement of austerity measures by the Greek government

Going down

• Ports share price lost over 7.5 percent as investors made a sharp retreat from the Hong Kong stock market amid concerns over China’s tightened monetary policy in order to curb inflation

What to watch

• M&A activity in the sector is hotting up, with more transactions being announced each week

Luxury Sector Valuation, June 2011

Pierre Mallevays is a contributing editor at The Business of Fashion and founder and managing partner of Savigny Partners, a corporate advisory firm focusing on the retail and luxury goods industry