Luxury Retailers Use Capital Markets to Plot Bigger China Footprint

on March 1 2011 | in Retail Store Openings Trends | by | with No Comments

misssixty030111

Trying to keep up with China’s luxury retail market growth? Fasten your seat belt. The ride is rather wild. Analysts continue to draw forth figures cluttered with percent-plus signs, and reporters are processing still more announcements of retail luxury brands looking at, moving  into, and expanding in China.

Increasingly, retailers are looking to the capital markets to finance their China expansion. The latest is Italian fashion retailer Sixty Group. This follows Prada’s recent announcement to raise funds through the Hong Kong Stock Exchange. L’Occitane went public in Hong Kong last year.  Here’s an update of the three companies’ intentions thus far:

Sixty Group: Looking to Hong Kong IPO to bring Miss Sixty to smaller cities

Fashion retailer Sixty Group owns Miss Sixty, which is high-end casual wear. They have 10,000 outlets in department stores worldwide. Over 200 are on the mainland. They are to open 200 more in China. Their main thrust won’t be in big cities; they intend to set up 70 percent of their new outlets in smaller cities. To accomplish all this, they plan to raise US$75 million through an IPO in Hong Kong. When will the IPO take place? Sixty Group spokesman Paolo Bodo says it will be this year or next.

Prada: Eyes China web of stores in 45 cities

Prada plans to operate in 45 cities in two years’ time. That’s three times the number of its present 15 outlets. A pending IPO has received widespread publicity, as Prada is such a recognized European luxury brand. The IPO also would mark a historic first, with Prada being the first Italian company to be listed in Hong Kong.

Recent news from Reuters tells of progress. The Prada board gave their approval in late January to a Hong Kong IPO, and a more favorable regulatory environment in Asia also bodes well for Prada.

Last week Prada Chief Executive Patrizio Bertelli told the Italian newspaper La Repubblica that Prada would list between 15 percent and 20 percent of the group. Family owners would own 10 percent of the shares and creditor bank Intesa Sanpaolo would hold 5 percent.

According to Reuters, the IPO could value Prada at more than $8.25 billion.

L’Occitane: Nine more stores

This skin-care and fragrance company scored a previous historic first—the first French company to go public in Hong Kong. The initial public offering was 159 times oversubscribed. L’Occitane opened 14 stores in China in the first half of its financial year ending September 30, 2010. Its sales in the first half of September 2010 in China rose 43 percent. L’Occitane now intends to open nine additional new stores in China. The company shares are trading about 30 percent higher than the initial price of HK$15.08 last May.

[asia times]
photo credit: miss sixty

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