Celebrity shoemaker's float hit by downturn in luxury goods

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The Independent Online

The planned valuation of Tod's, the Italian shoemaker, which is floating on the stock market next month, could come under pressure amid a wider downturn in the luxury goods sector, analysts said yesterday.

The planned valuation of Tod's, the Italian shoemaker, which is floating on the stock market next month, could come under pressure amid a wider downturn in the luxury goods sector, analysts said yesterday.

The offer prospectus for the company, which is only the third pure luxury goods group to seek a listing in the past six years, indicates an estimated market capitalisation of between 1.136bn euros (£647.52m) and 1.498bn euros.

But analysts said Merrill Lynch, the sole book-runner for the initial public offering for the Milan float, could be forced to scale back the indicative pricing by about 10 per cent or more.Rising oil prices and continued volatility in the financial markets have called into question the timing of the float.

One analyst said: "It is just not the right time to be bringing this stock to the market, given all the turmoil we are seeing at the moment." He said the group was likely to struggle to meet its stated expectation of raising more than 300m euros from the flotation, adding that the original valuations were based on the price earnings multiples attached to more established groups in the sector. Representatives at Merrill Lynch said they were unable to comment yesterday.

Another analyst said: "By and large, the [luxury goods] sector has come off the boil in the last couple of months... Most of the portents suggest that the outlook could be more difficult for these companies going forward."

Tod's has a number of celebrity customers, including the actress Catherine Deneuve. The company, whose chairman Diego Della Valle lost a head-to-head with Prada to acquire Church's shoes last year, is due to float a 25 per cent stake on the Milan stock exchange by 6 November. In 1999, it reported consolidated net profits of L41bn (£12.6m) on sales of L425bn.

The downturn in the luxury goods sector could affect the plans of other groups, including Links, the UK-based cuff-link specialist, which has repeatedly hinted at a future flotation. The sector is particularly vulnerable to any economic slowdown, as consumers tighten their belts by cutting back on non-essential items.

The warnings come in sharp contrast to the boom in demand reported just months ago by groups such as Porsche, the car-maker, Tiffany's, the jeweller, and De Beers, the diamond company. In August, Tiffany said its second-quarter profits rose 7 per cent. De Beers' first-half profit more than tripled and Porsche unveiled plans to step up production of its 911 turbo model by almost two-thirds.

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