PRP.F - Prada S.p.A

Frankfurt - Frankfurt Delayed price. Currency in EUR
3.1000
-0.1000 (-3.13%)
As of 8:27AM CEST. Market open.
Stock chart is not supported by your current browser
Previous close3.2000
Open3.1000
Bid3.1000 x 250000
Ask3.1600 x 110000
Day's range3.1000 - 3.1000
52-week range2.2000 - 3.7200
Volume16,000
Avg. volume1,364
Market cap7.764B
Beta (5Y monthly)1.25
PE ratio (TTM)31.00
EPS (TTM)0.1000
Earnings dateN/A
Forward dividend & yieldN/A (N/A)
Ex-dividend date06 May 2019
1y target est6.67
  • Luxury Trendspotting Isn't Easy in the Covid-19 Age
    Bloomberg

    Luxury Trendspotting Isn't Easy in the Covid-19 Age

    (Bloomberg Opinion) -- Almost three weeks ago, the American retailer J. Crew Group Inc. filed for bankruptcy after it fell out of fashion. But there’s one item from the once-feted store that shoppers just can’t get enough of: masks. The most recent batch of nonmedical face coverings in its signature fabrics — plain blue shirting and blue-and-white stripes — has sold out on its British website.Upmarket, stylish face coverings could provide a bit of a boost in a coronavirus-strewn landscape, where luxury goods sales are expected to drop as much as 35% this year, according to Bain & Co. estimates. To give some idea of the pent-up demand, fashion search platform Lyst said searches for masks are up 1,600% over the past month, compared with a year earlier.   That’s sparked a huge debate in the luxury industry as to whether to cash in. After all, if we’re going to have to wear masks anyway, why not make them chic?It may be tempting. At the height of the crisis, many fashion houses — including LVMH’s Louis Vuitton and Christian Dior; Kering SA’s Gucci; Prada SpA; Burberry Group Plc; and Ralph Lauren Inc. — repurposed some production facilities to make personal protective equipment for donation to medical workers on the front lines. Burberry is poised to take delivery of a special mask-making machine at its mill in Keighley, Yorkshire. But the items will be for donation, not for sale in its shops. And they certainly won’t be made out of its iconic red, white, black and tan check.While the brands have gained the requisite skills, there are considerable risks associated with turning masks into fashion statements. So far, the bling behemoths are wisely keeping a respectable social distance.If luxury goods companies were to make masks for profit, not only would they need to look stylish, but they would probably have to boast some health effectiveness, too. And they’d have to be expensive to fit with any luxury brand’s high-end prices. For example, a Louis Vuitton monogrammed mink-fur sleep mask — perfect for catching some shuteye on that first-class flight — costs 700 pounds ($859).The danger is that luxury groups would be seen as profiteering from a health-care emergency. What’s more, according to consultants at McKinsey & Co., consumers shift to more subtle “silent luxury,” rather than in-your-face bling, after a large-scale crisis with a heavy emotional toll. What is perceived as unethical behavior — or simply ugly consumerism — could turn off customers, especially younger shoppers who are particularly conscious of brands’ social values.One way to get around this would be to give a percentage of the profits to good causes, or to donate one mask for every one sold. J. Crew has donated 75,000 single-use masks to Montefiore Health System hospitals in New York.Even if the pitfalls around profiteering are surmounted, there are other perils. Luxury is about feeling good. Brands must weigh whether they want to be associated with a pandemic and its huge human and economic toll. And although masks can have replaceable filters that extend their use, it’s unlikely people will hold onto them for long. Being disposable is anathema to luxury goods, from Hermes handbags to Cartier watches, for which heritage is crucial.That doesn’t mean face coverings won’t work for some brands. For example, Off-White, the streetwear label from DJ and designer Virgil Abloh, who is also the artistic director for Louis Vuitton’s menswear, has been producing masks for some time. Off-White’s $95 arrow-logo face mask was the most in-demand men’s fashion item in the first quarter, according to the Lyst index, which measures clothing and accessories searches on its own site, Google and other social media.Streetwear masks, along with heavy boots and multi-pocket coats, are part of an apocalyptic look that began to emerge before Covid-19. Serving to partly conceal one’s identity and repel other urban hazards like pollution, masks are a good fit with younger, edgier brands, such as the aptly named Anti Social Social Club. That’s not the case for traditional luxury.Consequently, the big fashion houses would be better off focusing their attention on items that can be accessorized with masks, or adapting products to changing needs. Luxury resale site Vestiaire Collective saw a 45% increase in orders for scarves, including Hermes’s classic silks, in the last week of March, compared with the previous seven days, and demand has remained elevated. Brands could experiment with supersized sun visors to ensure social distancing or extended collars that could double as face coverings.As the world emerges from the pandemic, and things become less emotionally charged, consumers may give luxury brands more permission to sell them protective clothing. For now, any move to do so will likely be a one-off to grab attention on the catwalk or Instagram. The pop star Billie Eilish, for one, donned a Gucci custom double-G-emblazoned mask for the Grammy Awards in January. While Gucci’s decision not to commercialize the product means passing up millions of euros of sales, it’s the right call.  This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • How Does Prada S.p.A.'s (HKG:1913) Earnings Growth Stack Up Against Industry Performance?
    Simply Wall St.

    How Does Prada S.p.A.'s (HKG:1913) Earnings Growth Stack Up Against Industry Performance?

    For investors, increase in profitability and industry-beating performance can be essential considerations in an...

  • Wanted: An Exchange Chief With Conflict Management Skills
    Bloomberg

    Wanted: An Exchange Chief With Conflict Management Skills

    (Bloomberg Opinion) -- Hong Kong’s stock-exchange operator is at a crossroads. Just like its home city, Hong Kong Exchanges & Clearing Ltd. needs to find a path through a turbulent era that reconciles its international and Chinese identities.HKEX is hunting for a new chief executive officer after Charles Li said he will step down by October next year at the latest, when his contract expires. Nicknamed “Mr. China” for his success in building trading links with mainland exchanges, Li doubled revenue during his decade leading the company. An attempt to vault HKEX into the top ranks of global exchange operators failed last year when the London Stock Exchange Group Plc rejected a $37 billion takeover approach, citing concerns over its relationship with Hong Kong’s government, which is appointed by Beijing.Li’s successor will have to carry forward his work of deepening ties with the Shanghai and Shenzhen exchanges, while keeping foreign investors happy by improving corporate governance. It’s a delicate task. The mainland Chinese markets are competitors as well as partners. Hong Kong is trying to position itself as the venue of choice for Chinese technology companies seeking to go public, especially as the U.S. market becomes less hospitable. Shanghai and Shenzhen are undertaking their own initiatives to persuade companies to list at home.Shanghai has been particularly aggressive, becoming the world’s top destination for initial public offerings in 2020 (albeit without a single overseas listing), a title that Hong Kong has held for years. While its Star market aimed at tech companies has yet to attract any big names, competition is heating up. Shenzhen, the southern city that borders Hong Kong, is preparing to emulate Shanghai by moving to a registration-based IPO system and scrapping limits on price movements on its Nasdaq-like ChiNext board.That will put a premium on finding a CEO who can match Li’s mainland connections and diplomatic prowess. With international expansion seemingly blocked off after the LSE rebuff and the coronavirus outbreak, HKEX’s growth will continue to rely heavily on cooperation with Chinese exchanges and regulators. Expanding the stock-trading pipes that Li established with Shanghai and Shenzhen is one route. HKEX scored a coup when New York-traded Alibaba Group Holding Ltd., China’s biggest company by market value, raised $13 billion in a Hong Kong secondary offering last November. Some of the sheen came off the celebrations when it emerged that Alibaba wouldn’t be included in the so-called Stock Connect programs, blocking mainland-based investors from trading the shares. Getting secondary listings on the Connect should be a priority — especially given Hong Kong is looking to woo other U.S.-listed Chinese companies such as JD.com Inc.There are further opportunities for expanding the cross-border trading links, including letting mainland investors buy overseas bonds. Currently, the three-year-old Bond Connect is a one-way system, allowing Hong Kong investors to buy mainland securities but not vice-versa. The next HKEX chief may also push for Hong Kong ETFs and IPO subscriptions to be admitted to the connect programs.At the same time, Hong Kong needs to keep its international flavor if it’s to appeal to Chinese punters who want access to global investments. HKEX slowed efforts to attract foreign listings in recent years, as volumes dimmed, having drawn some notable names including Italian luxury house Prada SpA. It should restart these. Hong Kong’s role as an international market depends critically on sustaining confidence among global investors that it is relatively clean and well governed. Under Li, the Hong Kong exchange bowed to the commercial imperative by opening the door to dual-class share structures and presided over a market where bad behavior among small-caps was endemic. His replacement will need to change Hong Kong’s reputation as a playground for short sellers such as Carson Block’s Muddy Waters and Gillem Tulloch’s GMT Research Ltd.Managing these push-pull conflicts — moving closer to China while becoming more international, building up business while improving governance — will take some dexterity. Li has said he may leave before the end of his term if a successor is found. An early exit is far from assured.\--With assistance from Zhen Hao Toh. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Reuters - UK Focus

    Global luxury gloom to deepen despite easing lockdowns -Bain

    Global sales of luxury goods are expected to slump by 50% to 60% in the second quarter even as some countries begin to ease coronavirus lockdowns and despite signs of recovery in the Chinese market, consultancy Bain said on Thursday. The coronavirus crisis, which first hit China late last year before spreading to Europe and the United States, has kept shoppers at home and forced retailers to shut stores, resulting in a crushing halt to a decade of spectacular growth for high-end brands. With the April to June decline coming on top of an estimated 25% drop in the first three months of the year, Bain expects global sales of luxury handbags, clothing and cosmetics to shrink by between 20% and 35% in 2020, against a previous estimate for a 15% to 35% decline.

  • Coronavirus Will Change Not Just How, But What, We Buy
    Bloomberg

    Coronavirus Will Change Not Just How, But What, We Buy

    (Bloomberg Opinion) -- As the coronavirus pandemic continues, Bloomberg Opinion will be running a series of features by our columnists that consider the long-term consequences of the crisis. This column is part of a package envisioning a new consumer economy. For more, see Mary Duenwald on technology changing how we shop and on how consumers respond to crises, and Tara Lachapelle on fixing the broken business model of streaming.During the coronavirus lockdown, a particular meme has been doing the rounds on Instagram and Twitter.It shows a woman in a pink ballgown, complete with tulle train billowing out behind her. She’s not reaching for a cocktail or standing on a glitzy red carpet. She is in a supermarket produce section, clutching a bunch of carrots in one hand and reaching for a red pepper with the other.The image encapsulates how some consumers feel: After being cooped up at home for months, they can’t wait to finally have an opportunity to get all dressed up again.But for many others, what they wear, how they shop and which products they buy will be forever altered by the pandemic. The Covid-19 outbreak, which has tragically infected more than three million people and killed more than 219,000, has also struck at the heart of consumerism around the world.With a quarter of a million stores closed across the U.S. at the height of the lockdown, according to research group GlobalData, the ability to purchase, long a symbol of affluence and status, is in peril. Never has materialism seemed so emasculated.First of all, there’s the immediate economic impact. With millions of workers temporarily furloughed and laid off, they will be reining in their spending. If these become permanent job losses, the effect will be even more severe. Conspicuous consumption is going to look ugly for a while.And habits learned in lean times often stick around. Witness the acceptance of discount retailers, such as the German no-frills supermarkets Aldi and Lidl. The cash-strapped middle classes in the U.S. and Europe discovered the delights of their cheap wine and value toilet paper during the 2007-2008 global financial crisis, and the budget grocers have prospered ever since.Then there’s the slow and incremental process of coming out of lockdown. Even individuals who have kept their jobs and full salaries may make longer-term changes to their spending, as it will be some time before they feel comfortable visiting crowded malls and dining out in restaurants again.With social distancing potentially staying in place for up to two years, according to KPMG, this could mean far-reaching consequences for the operation and physical design of stores. For example, stores might have to require appointments for visits, offer more check-out free locations and even rethink facilities such as changing rooms. Who wants to pick up discarded garments when the world is emerging from a pandemic?So far, there are some encouraging signs coming from China, where consumers emerging from lockdown seem to be embracing shopping once more. PwC estimates that as of early April sales at non-food retailers were at 50-80% of their pre-crisis levels. In luxury, the recovery has been even more extreme: A Hermes International flagship store took in $2.7 million when it reopened in Guangzhou in mid-April, believed to be a record daily haul for a boutique in China, according to fashion trade bible WWD. LVMH said some of its big brands on the mainland had seen 50% increases in sales in April compared to the previous year.This phenomenon is being called “revenge spending,” a phrase first coined to capture the desire for consumer goods unleashed in China during the 1980s, after the poverty and chaos of the Cultural Revolution. At the moment, Chinese shoppers are flush with cash after cancelled travel and events. However, this demand may not last, especially as the number of people allowed in boutiques at any one time is limited and initiatives such as temperature testing have been put in place.The bigger impact of this crisis, then, may be a shift in what consumers choose to buy.*****The outbreak has hit something we largely take for granted: our health. While more government resources are directed to healthcare — something that will have implications for taxes and disposable incomes — there will also likely be a reassessment of personal priorities. That could mean spending even more of one’s income on private health insurance or buying products that help boost immunity.Wellness had already become one of the few rich seams for consumer groups, giving rise to Beyond Meat Inc.’s plant protein burgers, South Korean gold-laced face masks and vitamin infusions sold in upmarket department stores. Despite criticisms that so-called self-care is the expensive preserve of millennial hipsters, society’s desire to ensure it doesn’t get sick will likely turbo-charge demand for these products.The pandemic has also fostered a renewed sense of community. This plus the inability to travel very far could encourage spending in more local shops and on brands with strong regional identities, as opposed to the big retailers who may have had empty shelves or struggled to deliver online orders during the crisis. Underlining the new mood, one British retailer with a long history of trading on the high street told me they’ve even noticed more customers saying thank you to staff in their daily interactions.  One sector that is poised to suffer tremendously going forward is clothing. Most consumers have effectively skipped a fashion season, being unwilling or unable to buy apparel for spring and summer. Conferences, parties and weddings have been cancelled, so we’ve simply needed fewer new clothes. There may be some pent-up demand when consumers rediscover their freedom, especially if retailers are having to cut prices to clear stock. But for many, essential grooming such as getting a haircut or a fresh set of eyelash extensions will take precedence over buying a new outfit.Some consumers who bought fewer clothes during this period may continue to reduce their wardrobe spend. The size of the average U.S. closet has already shrunk over the past three years, according to GlobalData. If you combine the pandemic and concerns about fashion’s environmental cost, it’s not hard to see how men and women may buy even less apparel in the future.During the prolonged shutdown, there will be some retailers that consumers simply don’t miss and therefore may not return to. U.S. department stores, such as Macy’s Inc. and J.C. Penney, already grappling with the shift toward online buying and with few compelling products, may well fall into this category. J.C. Penney skipped a $12 million interest payment and is evaluating alternatives including a potential bankruptcy filing to restructure its finances, Reuters reported recently. Macy’s, meanwhile, is exploring ways to use its real estate to secure fresh cash. Indeed, some storied names may shut their doors forever, or decide that the time is right to close a number of locations.  How brands behave when the chips are down will also determine how customers react to them when they come out of lockdown.Some have acted particularly well, adapting their offerings to meet changing needs. For example, luxury goods groups, including LVMH, Kering SA, Prada SpA, Burberry Group Plc and Ralph Lauren Corp, repurposed their facilities to produce protective equipment such as hand sanitizer, masks and gowns. Brands like Nike and Lululemon have engaged shoppers with online workouts; while British clothing and food retailer Marks & Spencer Group Plc. has offered meditation sessions. This nimbleness won’t be forgotten.*****Whether out of necessity or choice, shoppers will want goods that are appealing — and, after a health scare, make them feel good — but are priced at a level they believe is appropriate. This doesn’t always mean the cheapest, but it does mean a perceived sense of good value for money. That’s at odds with the approach of higher initial prices followed by steep markdowns that has become a hallmark of much U.S. retail. But as customers become more discerning, store groups will need to distinguish themselves with more than just discounts.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Prada gradually restarts production in Italy, to test employees
    Reuters

    Prada gradually restarts production in Italy, to test employees

    The company said it reopened its industrial sites in Tuscany on April 20 and those in the central regions of Umbria, Marche and the northern region of Veneto - one of the hardest-hit areas - after that. Other luxury groups, including Kering's <PRTP.PA> Gucci, Ferragamo <SFER.MI> and Valentino, have partially reopened activities in Italy since April 20, with more businesses in the country due to restart from May 4. Prada said the safety measures at its sites also included reduced working hours or staggered shifts, as well as temperature testing and the supply of protective kits.

  • Prada S.p.A.'s (HKG:1913) Stock's Been Going Strong: Could Weak Financials Mean The Market Will Coorect Its Share Price?
    Simply Wall St.

    Prada S.p.A.'s (HKG:1913) Stock's Been Going Strong: Could Weak Financials Mean The Market Will Coorect Its Share Price?

    Most readers would already be aware that Prada's (HKG:1913) stock increased significantly by 19% over the past month...

  • Analysts Have Lowered Expectations For Prada S.p.A. (HKG:1913) After Its Latest Results
    Simply Wall St.

    Analysts Have Lowered Expectations For Prada S.p.A. (HKG:1913) After Its Latest Results

    Shareholders of Prada S.p.A. (HKG:1913) will be pleased this week, given that the stock price is up 10% to HK$22.00...

  • Coronavirus halts growth at Italy's Prada
    Reuters

    Coronavirus halts growth at Italy's Prada

    Coronavirus has halted two years of sales growth at Italian fashion group Prada <1913.HK>, which accelerated in the second half of 2019, the company said on Wednesday. The epidemic, which is severely hitting sales across the whole luxury industry, "interrupted the growth trajectory" and will have a negative impact on this year's results, the company said. "Prada is implementing a comprehensive contingency plan to mitigate such effects, relying on its flexible supply chain and lean organization," it said in a statement.

  • What Is Prada's (HKG:1913) P/E Ratio After Its Share Price Tanked?
    Simply Wall St.

    What Is Prada's (HKG:1913) P/E Ratio After Its Share Price Tanked?

    Unfortunately for some shareholders, the Prada (HKG:1913) share price has dived 31% in the last thirty days. Even...

  • Reuters - UK Focus

    Sailing-America's Cup teams call off Sardinia regatta in April

    An America's Cup World Series (ACWS) event due to be raced in Cagliari on the Italian island of Sardinia has been called off due to the coronavirus outbreak, two teams said on Friday. The planned ACWS races between Emirates Team New Zealand and the three challengers Luna Rossa, INEOS Team UK and American Magic were going to be the first test for revolutionary new "foiling" yachts which "fly" over the water on a hydrofoil. "It is quite obvious that the ACWS Cagliari event cannot go ahead," Emirates Team New Zealand, which is due to defend the "Auld Mug" in Auckland in March 2021, said in a statement.

  • Why Prada S.p.A.’s (HKG:1913) Use Of Investor Capital Doesn’t Look Great
    Simply Wall St.

    Why Prada S.p.A.’s (HKG:1913) Use Of Investor Capital Doesn’t Look Great

    Today we are going to look at Prada S.p.A. (HKG:1913) to see whether it might be an attractive investment prospect...

  • There’s a Lesson for Luxury in the Coronavirus Crisis
    Bloomberg

    There’s a Lesson for Luxury in the Coronavirus Crisis

    (Bloomberg Opinion) -- With the death toll from the coronavirus rising, the fate of high-end handbag sales still seems of minor consequence. But the $300 billion luxury industry’s over-dependence on Chinese spending was underlined again on Friday when British fashion house Burberry  Group Plc said it could no longer stand by its previous financial forecast because of the spread of the illness.Just two weeks ago, the company shrugged off disruption in Hong Kong to lift its outlook for sales growth excluding currency movements to a percentage in the low single digits, while anticipating that the operating margin would be broadly stable in the year to March 2020. Analysts at Morgan Stanley said Friday’s warning could imply a 5% cut to 2020 earnings.Burberry is particularly exposed to the epidemic. It generates about 40% of its sales from Chinese consumers at home and abroad. That’s above the 35% for the industry as a whole, according to Bain & Co. and Altagamma. So shutting some shops on the mainland and reducing hours at others has an out-sized effect.It’s too early to know what the end result will be for Burberry and the industry as a whole, but one key lesson is coming into sharp relief: While Chinese shoppers are a powerful force for the industry, no brand should neglect their customers closer to home, or stop trying to drum up demand in other corners of the world. When the Chinese market slumped in 2015 and 2016 because of a government crackdown on extravagance and gyrating stock markets, luxury houses all pivoted toward shoppers in Europe and the U.S. They have lost sight of the need to foster these markets since.For Burberry, it’s a particularly sensitive time to face such uncertainty in its biggest market. The group is in the midst of trying to revive its brand, best known for its black, white, tan and red check. While new iterations, such as the TB Monogram, are gaining traction, Burberry is having to prioritize. It’s now unclear whether a fashion show in Shanghai in April, will go ahead. The first Chinese showcase under new designer Riccardo Tisci will have specially created merchandise, clearly a way to build Burberry’s profile amid its rejuvenation efforts.Given these characteristics — high Chinese exposure plus a turnaround strategy — Prada SpA also looks to be at risk, and the Italian maker of the iconic nylon bag has already closed some stores in mainland China and Macau. The list of other luxury companies that are very dependent on China and Hong Kong is long. Swatch Group AG and Richemont are the most exposed, according to analysts at Bernstein. And Gucci, which accounts for 60% of French parent Kering SA’s sales and 80% of its operating profit, has been a hit with Chinese shoppers over the past three years. Anyone who has witnessed the proliferation of Gucci T-shirts, not all the real thing, in cities from Shanghai to Beijing would attest to its popularity.By contrast, Bernard Arnault’s LVMH looks to be better prepared to handle such a shock. With brands including Moet & Chandon champagne, pop star Rihanna’s beauty line and soon Tiffany & Co. jewelry, it has broad diversification by both geography and product range. Last year, for example, 24% of its sales from the U.S.But given the whole industry’s reliance on Chinese big spenders, no luxury or consumer brand with exposure to the them, wherever they shop, will be immune. Burberry said spending in Europe and other tourist destinations was less affected by the outbreak, but it expected conditions here to worsen too. This week, Coach owner Tapestry Inc., Michael Kors and Versace parent Capri Holdings Ltd. and Estee Lauder Cos. all lowered earnings guidance, citing the virus. Even luxury parka maker Canada Goose Holdings Inc., which has a strong following in the U.S. and Europe, has felt the impact of the outbreak. On Friday it lowered its full-year sales and profit guidance.Global luxury sales could expand by just 1% this year, according to analysts at Jefferies, after what they now expect to be a brutal 20% decline in Chinese demand in the first half. Before the outbreak, they were expecting the industry’s sales to grow by 5% in 2020.  While luxury shares have fallen over the past three weeks, valuations remain close to 10-year highs. As I have noted, the stocks have proved remarkably resilient in the face of everything from trade skirmishes to protests in Hong Kong.Burberry’s warning is a stark reminder that that could be about to change.To contact the author of this story: Andrea Felsted at afelsted@bloomberg.netTo contact the editor responsible for this story: Melissa Pozsgay at mpozsgay@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Reuters - UK Focus

    Sparkle fades as coronavirus risks wiping out luxury goods growth

    The luxury goods industry normally relishes the spotlight, but in the case of China's coronavirus it is rueing being one of the most globally exposed sectors to an epidemic that risks all-but wiping out its sales growth this year. Brands from Burberry to Estee Lauder are shutting stores and cutting profit forecasts as business in the industry's biggest market has virtually ground to a halt.

  • Billionaire Bags a Bling Bargain
    Bloomberg

    Billionaire Bags a Bling Bargain

    (Bloomberg Opinion) -- Maverick retailer Mike Ashley likes a flutter at the casino. With his punt on a stake in upmarket handbag maker Mulberry Group Plc, the British billionaire can’t lose.Ashley’s Frasers Group Plc, formerly Sports Direct, said late Monday that it had acquired a 12.5% interest in Mulberry, maker of the iconic Bayswater bag. Ashley, who owns 63% of Frasers, has long dabbled with investments in rivals. Some, such as a holding in JD Sports Fashion Plc, paid off handsomely. But a 30% stake in Debenhams Plc was wiped out when the U.K. department store chain was taken over by its lenders last year.The interest in Mulberry has all the hallmarks of a winner. First, Ashley has likely picked it up on the cheap. Frasers did not disclose the cost. But at Monday’s close, the stake would be worth about 19 million pounds ($24.7 million).Shares in Mulberry have never really recovered from a botched strategy around five years ago, when Bruno Guillon, a former Hermes manager who was chief executive officer at the time, tried to take the leather goods and apparel company upmarket, alienating many of its core customers. New CEO Thierry Andretta and designer Johnny Coca, who joined from Celine, have since returned the brand to its accessible luxury heartland. But the shares remain about 85% off of their 2012 peak.Second, there’s clear strategic logic for Ashley to work more closely with Mulberry. The idea of transforming House of Fraser into the “Harrods of the high street” has been widely mocked because of the department store’s poor performance following its purchase in August 2018. But Ashley clearly wants to take the chain more upmarket. It’s likely to end up as a smaller, more high quality estate.Mulberry is currently in 19 House of Fraser stores, where it trades well. It is also available at Flannels, Ashley’s boutique that sells the likes of Canada Goose and Balenciaga, which is still flying.But there is another reason why Ashley’s interest in Mulberry might pay off. The quintessentially British brand has long been seen as a takeover target. Consolidation in luxury is intensifying, with LVMH’s $16.5 billion purchase of Tiffany & Co and speculation swirling around Moncler SpA and Prada SpA.  While it can’t be ruled out that Ashley will lift his interest further, a big luxury group could also make a move for Mulberry.It is tightly held, so any predator would have to convince the Ong family, which owns 56%, to sell. That may not be easy given that the value of its stake has fallen over recent years. But it may be worth trying given that quality assets are rare, especially those without a big stake held by the families that founded the companies. Longer term, there’s also the possibility that Burberry Group Plc, if its turnaround works, could be interested as part of any future efforts to turn itself into a British luxury conglomerate.In the event of any approach, Ashley not only stands to gain financially, but secures a seat at the table when it comes to this strategically important brand.Conversely, there’s nothing to stop Ashley filling his luxury shopping bag elsewhere. For example Burberry, still in the midst of its turnaround right now, commands a large selling area in Flannels’ new flagship store on Oxford Street for its street wear and rejunvenated accessories.Mulberry might not be this billionaire’s last bling bet. To contact the author of this story: Andrea Felsted at afelsted@bloomberg.netTo contact the editor responsible for this story: Melissa Pozsgay at mpozsgay@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Fitness Clubs Feel the Burn
    Bloomberg

    Fitness Clubs Feel the Burn

    (Bloomberg Opinion) -- Hitting the gym to lose a few extra pounds? It’s likely you’re not alone. Lapsed fitness-club members typically return in January, with new sign ups in February, much to the annoyance of those workoutaholics who turn up whatever the season.But they may have less to complain about this year. There are more and more fancy classes to choose from. Boxing is so hot right now that French fashion house Balmain, Puma SE and model Cara Delevingne have created a clothing line inspired by the ring. At the other end of the spectrum, workouts that are more Primark than Prada have rocketed.The legacy fitness operators are caught between these two trends, trying everything they can to keep their members coming back. In the U.K., where the number of health clubs exploded last year, they span brands including Virgin Active, David Lloyd Leisure and DW Fitness First. It’s the ultimate barbell economy, if you like, as an exercise market frenzy that began in the U.S. shakes up the rest of the world.  In the burgeoning no-frills sector, you may not get a towel, but for about 20 pounds a month you do get access to workout spaces, equipment and classes. In Europe, low-cost groups now account for half of the top 10 operators by revenue, according to Deloitte and EuropeActive, and these are leading revenue growth. Competitors there include Basic-Fit NV, McFit Gmbh and in the U.K., Pure Gym and The Gym Group Plc. They’ve been able to take advantage of stress in shopping areas to add temples of sweat. In the U.K. alone, more 1,000 retail spaces, from Blockbuster stores to post offices, have been converted into gyms over the past five years, according to the Local Data Company.At the very top end, pressure is coming from providers such as New York-based Equinox, the luxury fitness group that’s a majority owner in SoulCycle Inc., which has rolled into London. And a new generation of home fitness options are trying to eliminate the need to go to the gym at all, with personalized workout apps tracking your calorie burn in the privacy of your own home. The mainstream providers, many born out of the era when Jane Fonda’s Workout was at the cutting edge, must shape up too.All this pressure is a risk for investors, especially private equity owners, which will want to make a return and eventually seek an exit. For Brait SE, an investment holding company that owns Virgin Active, this could be sooner rather than later. Brait said recently that a restructuring plan could lead to asset sales.Virgin Active has sold off many of its British clubs leaving it with 43 in metropolitan areas, down from a peak of about 100. Its focus on more affluent members, who can afford to pay 20 pounds a pop for trendier classes elsewhere, makes it particularly exposed to the studios. Sales in the U.K. were flat in the nine months to Sept. 30, but underlying earnings rose 11.5% thanks to cost savings. To compete with the boutique crowd, the company has been investing in boxing rings and machines for extreme Pilates.However, sales at its clubs in Italy, South Africa and Asia are growing. Any new owner may look to expand its Asian footprint. One winning strategy for legacy operators may be to concentrate on markets that are less crowded. David Lloyd Leisure, one of Europe’s largest gym groups by revenue, has already taken this route. It concentrates in the U.K. primarily on clubs with a family focus and racket sports, mainly outside of London, and is also expanding across Europe. Consequently, Ebitda has more than doubled under TDR Capital’s six-year ownership to 135 million pounds last year. Even so, it’s experimenting with Blaze, a stand-alone studio with a “high-end nightclub vibe” in Birmingham to try to fight off the insurgents.But legacy fitness operators can take some comfort.As my colleague Sarah Halzack has noted, studio concepts, some of which are also attracting private equity interest, flourished in a buoyant economy. Consumers pulling in the purse strings may take a different view of value, and if clubs can sufficiently up their game, a monthly gym fee might start to look more attractive than high-priced pay-as-you-go aerial yoga classes. The budget sector may be due for a shake up too. There has already been significant consolidation, led by Pure Gym and The Gym Group, but there could be further reshaping as smaller operators feel the burn.But for the mainstream brands, it’s too early to break for a relaxing cooldown any time soon.To contact the author of this story: Andrea Felsted at afelsted@bloomberg.netTo contact the editor responsible for this story: Melissa Pozsgay at mpozsgay@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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