Hilfiger Holds, Is Prada Next?

Posted by: Charles DuBow on January 25

Tommy Hilfiger has put his planned European IPO on hold amid concerns about a global slowdown in consumer spending, according to a report today in the New York Post. Apax Partners, the British-based private equity firm that owns the Hilfger brand, is reported to have said that they will postpone the offering “until such time that market conditions have stabilized.” The decision raises questions about the planned IPOs for two other upmarket retailers, Prada and Salvatore Ferragamo, will also be temporarily shelved.

As I blogged about on January 8, even if consumer sentiment and spending were strong a Hilfiger IPO would have been tricky. Sure, it would have helped Apax recoup the $1.54 billion it spent taking the then-troubled brand private in 2005 (they were looking at a potential payday of nearly $4 billion), but would there have been sufficient appetite in the marketplace for its stock? Hilfiger had been a high-flyer in the 1990s after its first IPO in 1992--trading on the NYSE under the ticker TOM--but was snapped up by Apax shortly after the stock crated at $6 as consumers lost interest in his simple, colorful All-American clothes.

Today his palette is more somber and his clothes more Euro, but they have lost their distinctiveness. Just as many critics in the 1980s and '90s complained that Hilfiger's designs were lower-priced knockoffs of Ralph Lauren, it would be difficult to see how his current line differs from labels such as Gucci, Burberry and other popular brands. Of course, it's possible that Hilfiger and Apax could re-emerge if the global economy heats up again but for the time being keeping the company private seems like a good idea.