Will Jimmy Choo go pub­lic?

Financial Mirror (Cyprus) - - FRONT PAGE -

It has won over top celebri­ties and Hol­ly­wood stars. But can it now ap­peal to Bri­tish in­vestors? A range of po­lit­i­cal and eco­nomic fac­tors have con­trib­uted to slow­ing growth among many of Europe’s largest lux­ury brands and top fash­ion houses. Yet, in the midst of this wa­ver­ing sales scene, ru­mour has it that Jimmy Choo may be seek­ing to move for­wards with an IPO later this month.

A trusted source re­vealed to Reuters that the lux­ury shoe brand will be pledg­ing to ex­pand in Asia and else­where in or­der to achieve in­dus­try-beat­ing an­nual sales growth or over 10%.

Fa­mous for adorn­ing the feet of the rich and fa­mous, the firm’s av­er­age an­nual sales growth has con­sis­tently stayed around the 15% mark for the last three years. If suc­cess­ful, its IPO could value the company at over $1.14 bln and make it the third lux­ury brand to fea­ture on London’s stock mar­ket after Mul­berry and Burberry.

Is it brave or fool­ish for this Bri­tish brand to con­sider launch­ing its IPO at a chal­leng­ing pe­riod for lux­ury re­tail­ers? The in­dus­try has been fac­ing a slow­down in growth since the sec­ond half of 2012, and the sales growth of its main listed stocks fell an es­ti­mated 5-6% this year, largely due to shrink­ing de­mand from their Chi­nese and Rus­sian fans.

The Chi­nese have tra­di­tion­ally had a huge ap­petite for lux­ury goods and in 2011 growth in lux­ury spend­ing on the main­land rose 30%. The num­ber of mil­lion­aires is ris­ing all the time, and the new mid­dle classes view de­signer items as a way of show­ing off to their peers that they’ve made it.

Although the Chi­nese were cred­ited with one third of all lux­ury pur­chases in 2013 and travel re­tail is boom­ing, do­mes­tic sales have been hin­dered by the gov­ern­ment’s cam­paign to curb business gift-giv­ing and by hikes in im­port taxes. A num­ber of high-end brands were left with no op­tion but to cut prices.

Simultaneously, the in­dus­try is ex­pe­ri­enc­ing re­duced de­mand from Rus­sians. The cur­rent con­flict in the Ukraine, com­bined with a weak­en­ing rou­ble, means that fewer Rus­sian shop­pers are trav­el­ling abroad and splash­ing out in the ex­pen­sive depart­ment and brand stores in Europe’s ci­ties.

How­ever, in­sid­ers sug­gest that Jimmy Choo is stand­ing tall and con­fi­dent. The company will be ar­gu­ing that de­spite the cur­rent in­dus­try trends, its fu­ture growth rates will re­main pos­i­tive, and that the high-end shoe mar­ket is a fast grow­ing sub-cat­e­gory within the lux­ury goods sec­tor. It plans to con­tin­u­ing open­ing around 10-15 stores a year glob­ally as it has done over the past years, with a fo­cus now on Asia where its cur­rent pres­ence is rel­a­tively small.

De­pend­ing on the ex­act terms of an IPO, the pull of its stilet­tos and leather goods could help to raise up to 200 mln pounds. The com­ing weeks will be telling, but don’t be de­ceived by the big­ger pic­ture about the lux­ury sec­tor.

There is an ex­cep­tion to ev­ery rule: it is very pos­si­ble that this popular brand may be able to con­vince Bri­tish in­vestors that it has what Asian shop­pers want.

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