Prada: The IPO Dilemma

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Excerpts

Prada was established in Milan, Italy in 1913, when Mario Prada (Mario) started selling shoes, leather handbags and trunks under the Prada label in his Milan boutique. Mario's classic Prada suitcases, made of heavy walrus skin, became immensely popular...

Miuccia and Bertelli had attempted to build a new image for Prada that capitalized on Muiccia's bohemian yet refined style. They made sure that Prada's product line strongly reflected the group ethos. Miuccia's designs revolved around innovation and tradition. Classic Prada clothes were marked by spare designs in high-tech fabrics with small details, such as tiny buckles or leather buttonholes, noticeable mainly to people clued in to the Prada sensibility...

In 1997, Prada recorded sales of $770 million, up 66% from 1996. Though sales were growing at a record pace, so were Prada's overheads. As expensive new stores came up, Prada's overheads increased from 38% of sales in 1997 to 43% in 1998. In 1998, Prada recorded a net profit of $77 million on sales of $ 798 million...

As 2005 dawned, Bertelli had a lot on his mind. Going public had become a sore topic with him. But even as Bertelli veered away conversations from the “hot topic”, Prada's finances remained a major concern. In June 2005, a $ 910 million convertible bond (Deutche Bank) would mature...

Exhibit 1: The Prada Designs
Exhibit 2: Global luxury brands
Exhibit 3: Prada's Buying Spree
Exhibit 4: Sales$bil Five Year Growth

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