Is Hugo Boss Or Prada Going To Be A Big Test Or Something?

Since the beginning of this year, the stock market value of Prada has evaporated 37%. Meanwhile, the market value of Hugo Boss has fallen by more than 20%.

Although the Thierry Cota of Societe Generale is still holding the rating of Hugo Boss, it will also expect the price to be reduced from 100 euros to 89 euros.

Deutsche Bank's Gilles Erico still maintains Prada's rating in "buying", but expects the price to be raised from HK $47 to HK $45.

Economic impact and geopolitics are the main reasons for the weak sales performance.

The huge risk and uncertainty of Hugo Boss on this year's investor day, Hugo Boss still maintained its higher single growth and 25% EBITDA profit margin target in 2020.

Unfortunately, due to the rise of mixed operation in the US market, the company's performance in the US market has been poor this year and has continued until 2016.

According to the current international political atmosphere, Japan is the only country that can foresee a strong growth momentum.

He also pointed out that the impact of the euro will be very clear in the coming summer.

"We are also in mainland China, Hongkong, and the North American market is facing a loss of 7% to 8%."

Gilles Erico said that although the three quarter performance was facing a two digit decline, Prada continued to simplify its wholesale business.

However, due to the monetary effect of gross profit reduction and the internal consumption of companies,

It should lead to a certain amount of leverage.

The profit and sales per share in the 16 fiscal year have decreased by 9% and 3.4% respectively to cope with the poor performance expected in the three quarter and the global economic and geopolitical disputes.

Gilles Erico mentioned, "the reason we buy Prada stock is because we are optimistic about the brand's recovery capability. We believe that Prada can achieve the rebound in profit margins through scale drive."

The US market contributed 18% of the total sales this year, while the Greater China region contributed 8% of the total sales.

Analyst Thierry Cota believes that the performance of the entire European market will be affected by the geopolitical and French weak market performance.

Thierry Cota also indicated that the growth rate of retail sales of Hugo Boss in 2016 may be less than 5% in order to achieve the 2020 profit target.

Hugo Boss will continue to focus on improving sales of luxury goods and sales of women's garments.

Luxury goods sales from today's 10%~12% to 20% in 2020, while women's clothing from 11% today to 15% in 2020.

The company also hopes to focus on online store sales and the Chinese market.

When consumer demand is more and more polarizing, it is in fast selling brand.

The awkward position is still a matter for Hugo Boss to consider.

The analysis points out that Hugo Boss still faces many obstacles to improve its performance, such as a significant proportion of product purchase rates in emerging markets.

Thierry Cota expects that the new strategy of Hugo Boss can solve such problems as overstock in the United States, confusion in China's franchising, backward network sales, and sustained growth in operating costs.

Prada is ushering in a challenging quarter. In another report, Deutsche Bank analyst Gilles Erico said that the current economic situation and geopolitical background can not provide a good breathing opportunity for Prada, no doubt.

Still faces challenges.

Gilles Erico said that Prada expects to release bad retail results in the first three quarters, and expects sales to be flat due to exchange rate rise and regional contribution.