Michael Kors, billionaire? The designer's record-breaking IPO has proved so successful that other fashion brands are thinking of going public in hopes of coming close to the company's $8.97 billion valuation, WWD is reporting.
After going public at $25 a share, shares of Kors are up over 72 percent so far this year. A secondary offering of 25 million shares, expected to close Wednesday, has the stock priced at $47 a share. In other words, Kors is about to make serious bank--even more than before. At the initial offering, Kors netted himself a cool $117 million and if this secondary offering goes as planned, the designer will realize another $139.5 million. Forbes has estimated the designer's net worth will reach the billions soon, when the KORS stock price hits $63.25. In other words, we can expect to see Kors' name on Forbes' billionaire list next year.
Overall, Wednesday's offering will raise $1.18 billion: Chairman and chief executive officer John Idol will bring in $81.3 million and the Lawrence Stroll and Silas Chou’s Sportswear Holdings will raise $550.8 million. Kors's stock price gives the company a total market capitalization of $8.97 billion and a price-to-earnings ratio of 114.6, which puts the company in a whole new league, and could pave the way for similar success for other fashion brands.
Brands like Kate Spade and Tory Burch. “It’s really raised the valuation or the perception of what the Kate Spade brand could be worth,” Corinna Freedman, an analyst at Wedbush Securities Inc, told WWD. “It’s also very similar to C. Wonder, to Tory Burch. It’s the new bridge. It’s probably why bridge [areas] in department stores have been underperforming, because there are all these younger, hipper interpretations of what that customer is now.” [Ed. note: Erm, did she not get the memo that C.Wonder and Tory Burch have nothing to do with each other--and that there's actually some bad blood there? Hmmm...]
Apparently the key to success is the company's focus on accessories, which is a higher margin business than apparel, and it's position as "accessible luxury" in the market.
"It’s luxury for that lower-tier customer," Freedman said. "It’s great merchandising to sort of skirt the line between luxury and accessible luxury.”
While fashion firms may be inspired by Kors' success--and are gunning for more money from buyers--not everyone is going to be quite as successful as Kors when it comes to Wall Street. “It took [Kors] a long time to get there, and it took that business a long time to get there,” Douglas Hand, an attorney representing designers at Hand Baldachin & Amburgey, told WWD. “He’s been relevant for three decades. It’s an objective measure, and it’s a high measure, so people will fly to it as justifying a valuation.”
Whether or not other brands will be able to achieve the same kind of success in the market remains to be seen, but one thing's for sure: Kors has definitely started a new fashion-forward trend in the finance world.