Prada Announces That Brands Will No Longer Carry Out Quarter End Discount Promotions.

Hongkong luxury group Prada (Prada), which is listed in Italy, has announced plans to stop the quarter end discount sales promotion activities so as to enhance the profitability of the group and protect the brand image.

Patrizio Bertelli, CEO of Prada group, said in an analyst conference call: "we decided to stop selling price cuts from 2019.

We believe that this decision will further enhance brand image, and in particular, ensure higher profitability. "

Bernstein analyst Luca Solca pointed out that although the cancellation of seasonal promotions would have a negative impact on the short-term sales growth of the group, it welcomed the change.

In the luxury industry dominated by large group of cash flow such as French luxury goods giant LVMH group and Kering, Prada is facing not only competition from mature brands, but also a large number of emerging luxury brands in recent years.

Before the Prada announced the news, Gucci and other brands have announced the cancellation of the end season promotions and summer discount activities.

In March 12th, Prada group released its latest annual report on fiscal year 2018, and its sales grew for the first time in four years.

As of December 31, 2018, Prada Group sales increased 6% to 3 billion 142 million euros, and EBIT (pre tax profit) fell 10% to 324 million euros.

In the past 12 months, Prada's stock price has fallen by 31%.

In the past four years, sales of Prada group have been declining.

The group has formulated and implemented a series of strategic changes to boost its performance, such as investing in building e-commerce business, replacing management teams, and launching guerrilla shops focused on Asian markets.

Driven by these new strategies, the group's sales began to pick up gradually from the end of 2017.

Patrizio Bertelli pointed out that the results of the 2018 fiscal year show that the group's strategy has come into force. Despite the impact of the French "yellow vest" campaign, the tight global economic situation, the strengthening of the US dollar and the slowdown in China's market demand in the second half of the 2018 fiscal year, the pre tax profit of the Prada group dropped by 10% compared with the same period last year, mainly due to the adverse effects of foreign exchange fluctuations.

Patrizio Bertelli said that the group will continue to accelerate the reform process in the future. "I am sure that these initiatives are necessary for the future development of the group and will create value for our shareholders in the medium and long term".

It is learnt that the strategic restructuring and organizational restructuring of the group will be completed in the coming months.

"At that time, the group will interpret the new generation's cultural evolution and brand image with more flexible organization and updated understanding."

According to Patrizio Bertelli, the group will continue to increase investment in three aspects: technology upgrading, digitalization and basic production facilities.

In the 2018 fiscal year, the Prada group's e-commerce business was "growing by two digits". The company hopes that by 2020, the electricity supplier channel will contribute 15% of the sales volume to the group.