Why Prada'S Performance Is Disappointing

Here in the world Clothing shoes and hats What the editor of www. web.com.cn told us is that Prada's performance has disappointed the market due to the influence of online shopping and anti-corruption factors.

Over the past two years, Prada's purse prices have been raised repeatedly, but the stock price has started to become cheap. For no other reason, Prada's performance is increasingly unsatisfactory. Recently, Prada's semi annual report performance disappointed the market. In the half year ended July 31, 2014, the revenue increased slightly by 1.3% to 1.751 billion euros, and the fixed exchange rate increased by only 4.5%; The group's net profit decreased by 20.6% to 245 million euros, compared with 308 million euros in the same period last year.

As for the reason for the decline, Prada said that it was affected by the macro-economy and exchange rate. It is expected that the situation in the second half of the year will be basically the same as that in the first half of the year. Yesterday, Prada shares closed down 6.31% at HK $48.25.

Liu Jianxiu, senior consultant of CIC, said that, Prada The growth rate of revenue is not enough to support the cost of store expansion, which is an important reason for the weak growth of its performance. Under the circumstances of rapid development of Internet thinking and e-commerce's apparent snatching of the share of physical stores, enterprises still focus on the expansion of physical stores, without the idea of combining online and offline, which really has greater risks.

　　 Affected by online shopping and other two factors

Recently, Prada announced its interim results as of July 31 this year, with a net profit of 245 million euros, down 20.6% from the same period last year.

Previously, after Prada was listed on the main board of the Hong Kong Stock Exchange in 2011, the company's financial data has been very beautiful. In 2011, Prada, which had been listed for four months, released its first interim report. In the first half of 2011, its net profit was 180 million euros, a year-on-year increase of 74.2%. Net profit in the first half of 2012 increased by nearly 60% to 286 million euros; The net profit in the first half of 2013 was 308 million euros, up 7.7% year on year.

"The decline of Prada's performance is foreseeable, but it may not be expected to have such a large decline." An analyst in the clothing industry told reporters that Prada's situation was once relatively good in the industry when the whole luxury industry was depressed. But now it seems that Prada is hard to be immune to the domestic anti-corruption storm and retail downturn.

Prada Group expects that the situation in the second half of 2014 will be basically the same as that in the first half of 2014; Although the Group will introduce cost cutting measures to improve marginal profit, profit will continue to bear pressure. It is estimated that under the influence of weak demand in China and Europe, growth will further slow down in the next year.

As for the decline of Prada's net profit, Liu Jianxiu pointed out that on the one hand, it was due to the impact of domestic anti-corruption; On the other hand, when other enterprises quickly embrace the Internet and launch Internet marketing platforms, Prada still focuses on the development of physical stores, which also has an impact on the overall performance of enterprises.

　 China market Strategy needs to be repositioned

In the opinion of Zhu Danpeng, a researcher of China Food Business Research Institute, if Prada wants to stop the decline in net profit, the most important thing is to change its strategy in the Chinese market, especially to lower its product positioning from luxury products to ultra high-end products (ultra high-end means one grade lower than luxury products and one grade higher than high-end products), so as to meet the needs of consumers other than public consumption.

Zhu Danpeng said that although China is the second largest country in luxury consumption, the domestic consumer group has changed significantly. Among the two major consumer groups of the super high-end group and the public money consumer group, the original public money consumption has been suppressed. "Prada needs to lower its value." Zhu Danpeng believes that the negative growth of net profit shows that Prada's luxury positioning in the domestic market has been unable to support growth. Prada should make layout in the super high-end market, and enter e-commerce channels through the super high-end market to adapt to changes in the Chinese market.

Several investment banks have very different judgments about Prada's prospects.

Barclays cut the target price of Prada from HK $46 to HK $43 by 6%, maintaining the rating of "underweight". It believed that the weak retail market would continue to make Prada's income weak. It believed that the gross profit in the second half of the year was still under pressure, and it cut its earnings per share forecast for the next two years by 10% and 8% respectively.

JPMorgan Chase maintained its "neutral" rating, with a target price of HK $46.2, which means that Prada's gross profit margin has narrowed. At the same time, it lowered its profit and income forecast for this year by 16%. It is believed that the stock price will remain weak in the short term.

UBS still supports Prada. It maintains Prada's "buy" rating, with a target price of HK $65 (previously HK $72). UBS believes that Prada's medium-term performance reflects poor performance in the second quarter, but its gross margin will improve in the second half of the year.