Ralph Lauren (market cap = $15.2B), to begin with, and Michael Kors (market cap = $15.3B. note that it’s ~ $100m more than RL), more recently, are inspiring many new eponymous fashion labels to go public and pull in billions of dollars from investors, writes Peter Lattman, on The NYT’s DealBook.
With his red-carpet gowns, lush cashmere sweaters and jet-set shoulder totes, Michael Kors has influenced fellow designers across the globe.
These days, though, Mr. Kors is inspiring the fashion world not only with his “affordable luxury” merchandise, but also with the extraordinary success of his initial public offering nearly two years ago.
On Wednesday, Marc Jacobs announced his departure from Louis Vuitton to focus on an I.P.O. of his own brand. Last year, Diane von Furstenberg set off speculation about a stock offering when she hired a top-level fashion executive in a push to expand her business. And while Tory Burch has denied any near-term interest in an I.P.O, there are persistent whispers of a Wall Street debut.
Call it the Michael Kors effect.
To some extent, that makes sense. For, if, at some level, fashionable clothes are really not that different from each other (fashionistas, you can stop gasping now), and a high profile celebrity fashion designer has both the design chops and cachet to pull in shoppers repeatedly (no one-trip ponies here), then investors and bankers might be OK with eschewing traditional fears of being overly exposed to a non-diversified set of revenue streams.
The only thing I wonder though is about exposure – or too much of it, to be more precise.
Publicly traded companies, fairly or unfairly, have to show strong quarterly and annual growth numbers to Wall St, lest the stock be punished. And in order to do that, they can either wring more out of their existing customers or expand – geographically and/or across categories. But they need to do it in such a way that the increased visibility doesn’t damage perceived exclusivity, cachet and pricing power (in that order).
That, could be a delicate dance though, after a point.