Walking the Stock Exchange catwalk isn’t the fashionable thing to do

by Zornitza Kratchmarova

There are quite a few names in the Italian fashion world that have their eye on the Stock Market. Want some names? Luciano Cimmino, chairman of Pianoforte Holding, with the brands Yamamay and Carpisa, has been talking about quotation for months, if the markets improve. He has the project, and the figures are right.

The total turnover is above 300 million euros with a gross operating margin estimated at 45-50 million. Not bad. Especially in these lean times. Going on the stock market could be strategic to gather fresh resources for growth abroad. The company's program is to open new stores in a number of countries, as quickly as possible.

Starting with Spain, where Yamamay will be launched soon. Carpisa is already there and going strong. Even the former young rebel Renzo Rosso, chairman of Diesel (a member of the Only The Brave group), might be interested in evaluating an IPO, though not right away. Or at least, what was a definite «no» has become a «maybe», in a 2-3 year view.

The goal would be to acquire more transparency and achieve better synergism and acquisition. What about capital? They have it. In 2011 Diesel alone topped a billion euro turnover, for the first time. Rosso is quick to point out: «We don't need financing and we have no debts». If they decide to quote the company, therefore, it will be for reasons of growth. Especially for the outside lines.

The files on Rosso's table have been piling up for years and there could be more than one excellent opportunity. «Among the potential "new entries" on the Stock Exchange in the next 2-3 years, I would also mention Ermenegildo Zegna» says Carlo Pambianco, chairman of his own consulting firm, active in the fashion sector. «It's just a possibility: the family has always denied having similar intentions, but I wouldn't be a bit surprised if they took the same path as Ferragamo».

But that I mean having the company quoted, of course. Then they could liquidate anyone who doesn't want to go along with them. And obviously they could pick up a lot of resources for further expansion.

Gildo Zegna, chairman of the company, is very cool toward the idea: «We have 180 million euros in our treasury» he cuts short. While sales in 2011 were just under a billion euro and revenues totaled 936 million euros in 2010.

So is Pambianco just throwing out names? Maybe. But one thing is sure, there are a great many more companies that are potentially quotable on the stock exchange, no doubt about it. Pambianco makes his point by indicating as many as 50 «quotable companies». His study is thorough and very detailed. «I don't say they will» confesses Pambianco, consultant to all the brands that count. «But the figures are amazing».

If all 50 of the companies selected should opt for quotation, there would be a total capitalization of 28 billion euros. «The multiple hypothesized is 10 times the gross operating margin» specifies Pambianco. In other words, the 17 companies in the sector already quoted capitalize a total of 24 billion. The weight of fashion and luxury could therefore more than double.

A few more figures that make your head spin: the total turnover of the top 50 would be 17,224 billion euros and the gross operating margin would be close to 3 billion (2,801, to be exact). «But let's not kid ourselves» warns Pambianco. «Many are not even considering it. Starting with the top names like Dolce & Gabbana and Giorgio Armani». Though he adds: «Both would get a fantastic reception in Italy as well as abroad». Because a company that decides to go on the stock market does not necessarily have to do it in Milan.

Prada, which was quoted on the Hong Kong Stock Exchange has shown that it can be done on other markets as well. Those are just the markets that are always in search of the big Italian fashion brands.

It is no coincidence that last fall Erik Landheer, powerful vice-president of the Hong Kong Exchange, focused his attention on our country, organizing meetings one after another with the main Italian banks and others. The rumors at the time spoke of interest for Dolce & Gabbana, Roberto Cavalli and Versace. As well as for Ducati and Ferrari.

But aside from these exotic exchanges, is it a good idea to be quoted on the stock exchange? Examining the results achieved in 2011 by the main groups in the sector, it would appear so. Ferragamo is a good example. It was the only new entry for the year, not in the fashion sector but in the entire exchange. In just six months it raced to the top and on Monday December 19 it was listed among the «blue chips».

To be exact, with a weight of around 0.3% it entered the Ftse-Mib index in 36th place among the 40 stocks with the highest capitalization of the fleet. The stock has always recorded positive performance at least 9 euros above the original sale price. A unique case? No, because Tod's and Prada, among others, are also doing extremely well. Markets permitting, of course.

But what really count are the economic indicators. They are doing fine. Absolutely. In the first nine months of 2011 the company headed by Diego Della Valle leaped ahead 14.8% in sales to 699 million euros and profitability reached 192.4 million (+22.2%). Record figures for Prada as well: from January to September 2011 the turnover was 1.73 billion euros (+25%) and the gross operating margin moved to 486.5 million (+47%).

Will they set a good example? «Let's hope so» says Pambianco. He relaunches his forecast for 2012: «There will be a selection of the species with not a few acquisitions by foreign and other groups. Those with strong shoulders, already operating on an international scale will be able to withstand the backlash of the recession better. Those with a prevalently domestic focus will not have an easy time of it and may be forced to downsize or seek partners».