The success of the IPO outshot financial analysts’ predictions, which previously said the company would sell stocks priced between $17 and $19. Instead, Michael Kors Holdings set the stock price higher, at $20, and still watched the shares fly off the proverbial shelf. Apparently, the stock is already so popular that, according to WWD, it was oversubscribed (financial speak for when the demand exceeds the supply) by 10 times. The stock sale even beat out the banner $882m offering of Ralph Lauren in 1997, making it the biggest-ever public offering in US fashion, according to the Financial Times.
Besides a new vacation home (or two, or three) for designer Michael Kors, the record-breaking sale is significant in other ways. For one, it sets a new standard in the luxury market. Independent retail analyst Stacey Widlitz told the Financial Times, “It’s coming to the market at a time where we’re questioning the rate of growth in luxury, so the valuation … is quite expensive compared to peers.”
The successful IPO also solidifies Michael Kors as a luxury lifestyle brand on par with Ralph Lauren or Burberry. At least in the eyes of the financial market anyway. “Investors consider [Michael Kors] a comparable name to Burberry and Prada in the high-end market,” Scott Sweet, senior managing partner at IPO Boutique, an investor advisory, told the FT.
However, some analysts remain skeptical that Kors will be able to maintain it’s current rate of growth, noting that comparable stocks like Prada have dipped below their debut price. “Everybody wants to be the next Ralph Lauren,” Faye Landes, a retail analyst at Consumer Edge Research in Stamford, Conn., told the New York Times, “But how lasting the brand will be remains an open question.”
Of course, only time will tell. But for all you financial-minded fashion junkies in the mood for a gamble, KORS began trading on the New York Stock Exchange this morning and the man himself ran the bell. Go get yours.