Response to Nodoka Hashimoto’s Blog: “Jimmy Choo IPO: Attractive (and shaky)”
Recently, the luxury shoe brand Jimmy Choo issued an IPO. Nodoka Hashimoto’s blog post,“Jimmy Choo IPO: Attractive (and shaky)” provides fascinating insight as to why this decision may not be sustainable in the long-term. The post describes how becoming a public company is associated with high inventory costs, could potentially harm the companies well-respected image and could reduce the amount of high-end customers. While I agree with these aspects, I believe that the opportunity cost is far less.
Personally, when I read that the company was “going public”, my first thought was that not only must they be quite established, but also sufficiently confident in their statistics and qualitative research which supports their decision to do so. Hence, I feel that they can have a competitive advantage, for example, they can pay off their debts and focus on increasing long-term profits. The IPO can potentially draw more prestigious designers that can enhance the brand, preventing it from becoming “less chic”. Also, with more investors they can devote more resources and time into understanding the Chinese market, in which they desperately wish to raise sales; focusing on Asia, they plan to open 10-15 stores a year. Overall, these benefits can counteract some consequences of being the first public company in the luxury shoe industry.