Prada dumps float plans, but Burberry vows to continue

Flotations

The plunge in stock markets around the world claimed the first initial public offering scalp yesterday as Prada, the Italian fashion house, shelved plans for a debut next month.

Prada blamed the delay – its third in 12 months – on "worsening" market conditions. It had planned to go head-to-head with the British luxury goods group Burberry and float in July but yesterday's setback is expected to dent its chances of reviving its listing this year.

Analysts warned that the sharp fall in investor confidence – marked by stock markets falling to their lowest levels in nine months – was likely to derail the fragile new issues market.

Steve Russell, equity strategist at HSBC, said the IPO market would be "very, very weak indeed". He added: "We are likely to see more being pulled and prices cut. It may make some venture capitalists floating companies think twice about going ahead [and] will certainly delay the pipeline."

However, other IPO hopefuls – including Burberry, the directories business Yell, the DIY group Focus Wickes and the Irish drinks group C&C – yesterday said that their flotation plans remained on track.

Analysts distinguished between Prada, a family owned group famous for its handbags that owns a number of lesser-known brands, and Burberry, which had been rescued from comparative obscurity by its chief executive, Rose-Marie Bravo. "The Prada story has always been more complicated," one luxury goods analyst said.

A source close to Yell, which is due to start trading next week, said institutional interest had been strengthening but that it was too early to predict what the final response would be. Cantor Index, the spreadbetting group, trimmed Yell's grey market price by 7p to 300p to 310p, compared with the company's indicative pricing range of 270p to 345p.

Focus Wickes, which is also due to start trading next week, insisted its "price range is sensible given it was set to represent good value in difficult market conditions".

Separately, GUS, which owns Burberry, revealed Terry Duddy, the chief executive of its Argos group, saw his pay increase by 75 per cent to £1.3m while John Peace, GUS's chief executive, took home £1.5m against £1.6m a year earlier.