Armani’s valuation on the stock market is at least 5 billion euros

Giorgio Armani on the Italian stock exchange may have a value of approximately 5 billion euros. Recent news regarding changes to the company’s bylaws that open up the possibility of going public prompted MF Fashion to interview several analysts and investment bankers to determine the value of one of the few remaining Italian luxury groups that is still owned by its founder. As a result, finance now assumes a role as a potential player in the future of the company. In addition, experts agree that an ipo for the company has all the necessary qualifications to replicate the success of Moncler.

According to company documents, it will take five years from the entry into force of the bylaws regulating the succession before the company can consider «listing shares on a regulated market». An analyst at a major global investment bank suggested that if Giorgio Armani spa listed today, its capitalization could be between 5 and 7 billion euros. «In 2022, Armani’s consolidated revenues reached 2.35 billion euros, with potentially higher value since a significant portion of the company’s business operations are licensed, resulting in royalties being the only source of income for the group», according to an anonymous industry expert. If someone were to approach the Milanese company today with a potential offer, the estimated value would be even higher. «If the company were to be sold at this moment, although highly unlikely, it could be worth between 7 to 10 billion dollars due to its uniqueness», the analyst explained. «It is a remarkable brand that has achieved unparalleled success. It is the only brand in the luxury market that is truly multifaceted, with a range that includes ready-to-wear and haute couture fashion, hospitality projects, home furnishings, fragrances, and eyewear».

The valuation aligns with that of another expert who disclosed how comparable companies to the Armani group currently trade at 25 times earnings. Therefore, based on the net profits of 162 million during the last fiscal year, the valuation is estimated to be «between 4 and 5 billion euros, minus any debt». The ongoing geopolitical crisis may trigger changes in the parameters, despite the fact that the fashion house has remained resilient to economic fluctuations. Last year, their revenues increased by 16.5% and their ebit grew by 30%, reaching 202 million euros. «If the brand is still considered a true luxury at the time of the future listing, this could determine its market capitalization», the investment banker explained. However, if the brand has been downgraded to affordable by then, the value will need to be halved. «It is unlikely to occur, but due to the founder’s prominent role, one must consider the successors’ need to continue selling Armani without him. To achieve this, they must convince customers that Armani remains a true luxury brand», the expert explained.

Continuing the work of the designer-entrepreneur is the primary objective expressly set out in the Giorgio Armani Spa bylaws that will govern the group post-Armani. Leaked information suggested that the group will continue to promote the «pursuit of an essential, modern, elegant, and unpretentious style». Furthermore, according to passages from the document disclosed by Corriere della sera, the future strategy will involve «diversifying and segmenting different corporate brands while maintaining consistency in styling, imagery, products, and communication activities». The company will continue to «prioritize innovation, excellence, quality, and enhancing its products». Under these conditions, analysts confidently predicted that the Armani group’s listing would make them a rightful entry into the Ftse Mib. «Being included in that basket would require all funds replicating the index to purchase it, making the success of the IPO almost guaranteed», the expert concluded. «The valuation would match that of Moncler, the only fashion and luxury company in the current Ftse Mib, which is currently valued at 22 times its ebitda».

The fashion company led by Remo Ruffini is currently the most well-funded Italian organization, worth over 14 billion euros in the market. It appeared on the Italian stock exchange in 2013, debuting at 14.4 euros per share, and was incorporated into the Ftse Mib index in 2014. The stock reached an all-time high in November 2021 when its share price hit 70.2 euros but currently maintains a hovering rate of approximately 51 euros per share. Armani could potentially replicate this success. Will the company require a charismatic figure to lead its stock market debut? Our first source suggested that «a manager will be necessary to oversee the listing». One potential candidate mentioned is Federico Marchetti, founder of Yoox, who listed his e-commerce platform in 2009 and has been on Armani’s board since 2020. According to the analyst, «an outsider is more likely to be chosen due to the difficulties of developing a strong internal personality within the company currently». For now, the expert does not think it is likely that a new person will be brought on to assist with creative direction, as Prada did by bringing in Miuccia Prada to work alongside Raf Simons. «I cannot even imagine another designer taking his place right now. However, it is possible that a younger figure could emerge in the future to help connect with the newer generation», the analyst stated. «On the other hand, Armani possesses a distinct style and a devoted customer base, leading to its success. Its inimitable aesthetic sets it apart from other fashion brands and draws parallels with legendary brands such as Ferrari or Porsche. Hence, I predict that as an Italian company, it will thrive in the future. The company maintains a defined style and structure, allowing the team to function strongly even in the founder’s absence».

The fashion house’s future is in good hands, as the market suggests. The source stressed that surpassing Giorgio Armani is «impossible due to his unique skills», the expert highlighted. As a result, the focus should be on maintaining the brand with dedication. Through the provisions in the updated bylaws of september, Armani sent a message of continuity and confirmed his repeated statement of not intending to sell to others. He did so during a period that coincided with the evolution of the legacies of Leonardo Del Vecchio, Silvio Berlusconi, and Bernard Arnault. «As a result, he emphasized having the situation under control and conveyed an important message of continuity», according to the experts’ analysis. (All rights reserved)