Prada Case Analysis
Prada Case Analysis
“FINANCE” Course
“PRADA: TO IPO OR NOT TO IPO: THAT IS THE QUESTION, AGAIN” case analysis
Brief summary of the case with the emphasis on managerial problems that Prada faces.
Prada currently requires a significant amount of capital both to re-finance debt that is maturing in the next six to twelve months and to finance its intended growth into the Asian (especially Chinese) markets. Since financial markets are aware of Prada’s pressing need to raise capital, it is important for the board of directors to develop a credible strategy for raising the necessary capital of at least €1 billion. Although the press has been suggesting that Prada will do an initial public offering, the company has tried this several times in the past with no success, mainly because of bad timing (9/11, the SARS outbreak, and the ongoing global financial crisis and European sovereign debt crisis). The board has approached Guido Santini of the investment bank Grupo Capo Milano to come up with a number of credible alternatives and a strategy for raising the needed capital.
1. What is the current and future outlook for the luxury goods segment over the next couple of years? How should Prada position itself to prosper in this market?
Luxury goods segment proved to be resilient to the economic crises and had consistently grown from 1994 till 2010.The luxury industry grew approximately by 2% per year until 2007, and by 1% per year from 2007 to 2010.
Beginning from 2010, the global luxury goods market started a new growth phase driven by emerging markets. This was a significant change as growth was usually driven by the developed markets, especially the US.
Prada needs to support a global portfolio of leading luxury brand. Following the series of acquisitions and consistent with its attempt to become one of the top global brands Prada consistently worked on expanding its global footprint by opening and running its own stores around the world.
2. What should be Prada’s
“FINANCE” Course
“PRADA: TO IPO OR NOT TO IPO: THAT IS THE QUESTION, AGAIN” case analysis
Brief summary of the case with the emphasis on managerial problems that Prada faces.
Prada currently requires a significant amount of capital both to re-finance debt that is maturing in the next six to twelve months and to finance its intended growth into the Asian (especially Chinese) markets. Since financial markets are aware of Prada’s pressing need to raise capital, it is important for the board of directors to develop a credible strategy for raising the necessary capital of at least €1 billion. Although the press has been suggesting that Prada will do an initial public offering, the company has tried this several times in the past with no success, mainly because of bad timing (9/11, the SARS outbreak, and the ongoing global financial crisis and European sovereign debt crisis). The board has approached Guido Santini of the investment bank Grupo Capo Milano to come up with a number of credible alternatives and a strategy for raising the needed capital.
1. What is the current and future outlook for the luxury goods segment over the next couple of years? How should Prada position itself to prosper in this market?
Luxury goods segment proved to be resilient to the economic crises and had consistently grown from 1994 till 2010.The luxury industry grew approximately by 2% per year until 2007, and by 1% per year from 2007 to 2010.
Beginning from 2010, the global luxury goods market started a new growth phase driven by emerging markets. This was a significant change as growth was usually driven by the developed markets, especially the US.
Prada needs to support a global portfolio of leading luxury brand. Following the series of acquisitions and consistent with its attempt to become one of the top global brands Prada consistently worked on expanding its global footprint by opening and running its own stores around the world.
2. What should be Prada’s