Prada Leather Bags Repeatedly Raise Prices, Net Profit In The First Half Of The Company Fell By 20%

Two years, Prada's

Prices have been raised again and again, but share prices are starting to become cheaper.

Without any reason, Prada's performance has become increasingly unsatisfactory.

On the evening of September 19th, Prada's half year newspaper performance disappointed the market.

In the half year ended July 31, 2014, revenues increased by 1.3% to 1 billion 751 million euros, and fixed exchange rate growth was only 4.5%, while group net profit dropped by 20.6% to 245 million euros, with net profit of 308 million euros in the same period last year.

The reason for the decline is that Prada is affected by macroeconomic and exchange rate effects. It is expected that the situation in the second half of this year will be roughly the same as in the first half of the year.

Yesterday (September 22nd), Prada shares closed down 6.31% at HK $48.25.

Liu Jianxiu, a senior consultant of CIC, told reporters that Prada's revenue growth rate is not enough to support the cost of store expansion. It is an important reason for its weak growth in performance. Today, with the rapid development of Internet thinking and the obvious grabbing of entity share by businesses, enterprises still focus on the expansion of physical stores, but there is no way of combining online and offline.

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In September 19th, Prada released its interim results as of July 31st this year, with net profit of 245 million euros, down 20.6% from the same period last year.

Since then, since Prada listed on the main board of the Hongkong stock exchange in 2011, the company has handed out its financial data very beautifully.

In 2011, the 4 month old Prada released its first Chinese newspaper, with a net profit of 180 million euros in the first half of 2011, an increase of 74.2% over the same period last year.

Net profit increased by nearly 60% to 286 million euros in the first half of 2012 and net profit of 308 million euros in the first half of 2013, an increase of 7.7% over the same period last year.

"The decline of Prada's performance is predictable, but it may not be expected to have such a big decline."

A garment industry analyst told the daily economic news reporter that in the case of the entire luxury goods downturn, Prada's situation was once better in the industry.

But now it seems that in the case of domestic anti-corruption storm and retail downturn, it is hard for Prada to be independent.

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

For Prada's net profit decline, Liu Jianxiu pointed out in an interview with reporters, on the one hand, because of the impact of domestic anti-corruption; on the other hand, when other enterprises embraced the Internet quickly and launched the Internet marketing platform, Prada still focused on the development of the entity store, which also had an impact on the overall performance of the enterprise.

China's market strategy needs to be repositioned.

Zhu Danpeng, a researcher at the China Food Business Research Institute, seems that if Prada wants to stop the decline in net profit, the most important thing is that the strategy in the Chinese market needs to be changed, especially from the luxury products to the ultra high end products.

Zhu Danpeng told reporters that although China is the second largest consumer of luxury goods, it is now in China.

Obvious changes have taken place in the population. The consumption of public funds is suppressed in the two main consumption groups of the ultra high end crowd and the public consumption crowd.

"Prada needs to lower its status."

Zhu Danpeng believes that the net profit of negative growth shows that Prade's luxury positioning has not been able to sustain growth in the domestic market. Prada should layout in the ultra high end market and enter the electricity supplier channel through the ultra high end market, so as to adapt to the changes in the Chinese market.

For the future of Prada, the judgment of several investment banks is quite different.

Barclays reduced the target price of Prada from HK $46 to HK $43 from HK $6% to maintain a "reduction" rating, believing that the weak retail market will make Prada's income continue to be weak. I believe there will be pressure on Maori in the second half of the year to reduce the forecast of earnings per share for the next two years by 10% and 8% respectively.

J.P. Morgan has maintained a "neutral" rating with a target price of HK $46.2, which means Prada's gross profit margin has narrowed. At the same time, the profit and income forecast for this year has been lowered by 16%. I believe that the stock price will remain weak in the short term.

Prada, which still has strong support for Prada, has maintained Prada's "buy" rating with a target price of HK $65 (previously HK $72). UBS believes that Prada's interim results reflect poor performance in the second quarter, but the gross profit margin will improve in the second half.