Apparently a company needs more than handbags and a household name to pull themselves out of the red. Anyone care for a 20 shares of stock to go along with their newest Prada clutch?
By Suzanne Kapner, writer
August 26, 2008: 11:59 AM EDT
5 Prada fashion hits
Once a dusty old family luggage business, Prada is now of haute couture's most influential voices. Here's a look at the label's top industry-shaping designs. View photos
Sharp eye: Miuccia Prada's knack for creating the next hot style helped turn her grandfather's Milan store into a fashion juggernaut.
Power-house: At their Milan offices, Miuccia Prada handles design while her husband, Patrizio Bertelli, works to expand the business.
Photos
The sultans of style
Fortune's second annual Luxury Portfolio features the moguls, merchants and master craftsmen who are defining the business of luxury.
View photosPhotos
World's most expensive streets
Every city has one - a retail thoroughfare that houses the most exclusive stores. Real estate slowdown or not, these luxury corridors are still thriving - for now, at least. View photos
• Mickey Drexler doubles down
• Luxury market loses its luster
• World's most expensive streets
• Prada goes shopping - for money
• The sultans of style
Wal-Mart it isn't: Prada hired iconic architect Rem Koolhaas to design its Manhattan store.
What women want: Prada launched its first women's line in 1988 (left). This year's fall collection (right) presents a lacy look that can be had for $4,545.
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(Fortune Magazine) -- When the world's top fashionistas make their biannual pilgrimage to the Milan shows, Miuccia Prada, the house's oracle-like designer, is the one they come to see above all others. Known for her minimalist designs - embodied by her iconic black nylon bags - Miuccia, or Mrs. Prada, as her staff calls her, sets the pace of fashion.
A year ago she showed blousy tops and loose-fitting pants. This season the pajama-like looks have been popping up on runways all over Europe. "She is the designer that other designers look to for inspiration," says Ron Frasch, the chief merchant at Saks Fifth Avenue (SKS).
On a recent June evening, moments before Prada is to unveil its latest men's collection, the anticipation is palpable as buyers, artists, filmmakers, and publicists mingle in an old warehouse, part of a former industrial complex that houses the company's Milanese headquarters. By the time the last model takes his boyish steps down the runway wearing a polo shirt elongated to mid-thigh and a coat with a portrait collar and holster-like straps, a hush descends on the audience, who sit blinking in the half-light. Once again, Miuccia, 60, seems to have altered the course of fashion.
Prada's sleek fashions were not the only thing turning heads. Earlier this year, the private company reported that net profits in 2007 (the latest numbers available) had risen 66%, to $187 million. Sales had grown 17%, to $2.5 billion. Moreover, Prada had recently completed a reorganization in which it sold underperforming businesses, and in the past year it strengthened its management team with the addition of a handful of seasoned executives.
Missing out in Asia
Yet not all is well in the world of haute couture. With economies stalling around the globe, growth in the luxury industry has slowed to a crawl (see "Haute couture hits hard times"). More worrisome is that by some measures, Prada lags behind its peers. Cash flow as a percent of revenue is 19%, lower than many of its competitors'. At the Italian fashion house Dolce & Gabbana, for instance, the same measure of profitability stands at 28%.
Federico Lalatta, a Milan-based partner with the Boston Consulting Group, worries that Prada is missing out on the hordes of newly minted millionaires in the developing world. India, for instance, boasts three Louis Vuitton stores and two Gucci shops. Prada has yet to set foot in the country. "Prada has also been one of the latecomers to China," Lalatta says. "As a result, they don't enjoy nearly as good a reputation there as companies that entered the region early, such as Louis Vuitton (LVMHF) or Giorgio Armani."
To compete, Prada needs cash badly, not just to expand but also to pay down debt, much of it incurred in an ill-conceived acquisition spree. To raise money, Prada CEO Patrizio Bertelli, Miuccia's husband of 21 years, has indicated that the fashion house will list on the Milan stock exchange by year-end, pending market conditions.
While there has been no official comment, Prada is likely to sell about one-third of its outstanding shares in an offering that could raise as much as $1.5 billion. Control of at least 60% of the shares would still rest with Bertelli and the Prada family, who today own 95% of the company. (The Italian bank Intesa Sanpaolo owns the remaining 5%.) It's a formula other fashion houses are experimenting with. Salvatore Ferragamo plans to go public this year, and Versace may not be far behind. The Prada offering will be an important bellwether.
the rest can be found here:
By Suzanne Kapner, writer
August 26, 2008: 11:59 AM EDT
5 Prada fashion hits
Once a dusty old family luggage business, Prada is now of haute couture's most influential voices. Here's a look at the label's top industry-shaping designs. View photos
Sharp eye: Miuccia Prada's knack for creating the next hot style helped turn her grandfather's Milan store into a fashion juggernaut.
Power-house: At their Milan offices, Miuccia Prada handles design while her husband, Patrizio Bertelli, works to expand the business.
Photos
The sultans of style
Fortune's second annual Luxury Portfolio features the moguls, merchants and master craftsmen who are defining the business of luxury.
View photosPhotos
World's most expensive streets
Every city has one - a retail thoroughfare that houses the most exclusive stores. Real estate slowdown or not, these luxury corridors are still thriving - for now, at least. View photos
• Mickey Drexler doubles down
• Luxury market loses its luster
• World's most expensive streets
• Prada goes shopping - for money
• The sultans of style
Wal-Mart it isn't: Prada hired iconic architect Rem Koolhaas to design its Manhattan store.
What women want: Prada launched its first women's line in 1988 (left). This year's fall collection (right) presents a lacy look that can be had for $4,545.
More from Fortune
Dell bets on a small laptop
A flier strikes back
Green Gold?
FORTUNE 500
Current Issue
Subscribe to Fortune
(Fortune Magazine) -- When the world's top fashionistas make their biannual pilgrimage to the Milan shows, Miuccia Prada, the house's oracle-like designer, is the one they come to see above all others. Known for her minimalist designs - embodied by her iconic black nylon bags - Miuccia, or Mrs. Prada, as her staff calls her, sets the pace of fashion.
A year ago she showed blousy tops and loose-fitting pants. This season the pajama-like looks have been popping up on runways all over Europe. "She is the designer that other designers look to for inspiration," says Ron Frasch, the chief merchant at Saks Fifth Avenue (SKS).
On a recent June evening, moments before Prada is to unveil its latest men's collection, the anticipation is palpable as buyers, artists, filmmakers, and publicists mingle in an old warehouse, part of a former industrial complex that houses the company's Milanese headquarters. By the time the last model takes his boyish steps down the runway wearing a polo shirt elongated to mid-thigh and a coat with a portrait collar and holster-like straps, a hush descends on the audience, who sit blinking in the half-light. Once again, Miuccia, 60, seems to have altered the course of fashion.
Prada's sleek fashions were not the only thing turning heads. Earlier this year, the private company reported that net profits in 2007 (the latest numbers available) had risen 66%, to $187 million. Sales had grown 17%, to $2.5 billion. Moreover, Prada had recently completed a reorganization in which it sold underperforming businesses, and in the past year it strengthened its management team with the addition of a handful of seasoned executives.
Missing out in Asia
Yet not all is well in the world of haute couture. With economies stalling around the globe, growth in the luxury industry has slowed to a crawl (see "Haute couture hits hard times"). More worrisome is that by some measures, Prada lags behind its peers. Cash flow as a percent of revenue is 19%, lower than many of its competitors'. At the Italian fashion house Dolce & Gabbana, for instance, the same measure of profitability stands at 28%.
Federico Lalatta, a Milan-based partner with the Boston Consulting Group, worries that Prada is missing out on the hordes of newly minted millionaires in the developing world. India, for instance, boasts three Louis Vuitton stores and two Gucci shops. Prada has yet to set foot in the country. "Prada has also been one of the latecomers to China," Lalatta says. "As a result, they don't enjoy nearly as good a reputation there as companies that entered the region early, such as Louis Vuitton (LVMHF) or Giorgio Armani."
To compete, Prada needs cash badly, not just to expand but also to pay down debt, much of it incurred in an ill-conceived acquisition spree. To raise money, Prada CEO Patrizio Bertelli, Miuccia's husband of 21 years, has indicated that the fashion house will list on the Milan stock exchange by year-end, pending market conditions.
While there has been no official comment, Prada is likely to sell about one-third of its outstanding shares in an offering that could raise as much as $1.5 billion. Control of at least 60% of the shares would still rest with Bertelli and the Prada family, who today own 95% of the company. (The Italian bank Intesa Sanpaolo owns the remaining 5%.) It's a formula other fashion houses are experimenting with. Salvatore Ferragamo plans to go public this year, and Versace may not be far behind. The Prada offering will be an important bellwether.
the rest can be found here:
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