Prada'S Performance Has Increased For The First Time In Four Years, But China Is Still "Dead End".

The Prada group has recently brought some good news.

In the 2018 fiscal year, the group achieved its first growth in 4 years, and the total fiscal year sales rose by 3% to 3 billion 142 million euros in terms of the current exchange rate.

Not only did the Asia Pacific, the Americas, Europe, and the Middle East have made progress, but online channels also achieved double-digit growth, which is expected to reach 15% of total sales in 2020.

This is attributed to the Prada group's reform strategy from inside to outside in the past two years, updating products, entering the electricity supplier, speeding up the flash store, increasing digital marketing and strengthening social media. Even the eldest son of group CEO joined in this year, and is responsible for developing digital communication business.

From the design point of view, the latest series of head brand Prada has been quite successful, especially the sales of ready-made garments, which has increased by 10%.

In the case of new bag Sidonie and updated classic nylon products also won a good reputation, the next performance of the brand is also worth looking forward to.

After the announcement, Prada group also announced a new decision. In order to maintain brand value and increase profit margin, we plan to stop sales promotion at the end of the season.

Bernstein analyst Luca Solca believes that although this measure will have an impact on performance in the short term, it is still a correct decision.

However, it is not the time for Prada group to relax its vigilance.

Although sales increased a little, profits fell by 10% to 324 million euros.

This led directly to a 9.2% drop in stock prices in early trading on Monday, and a 864 million dollar market capitalization.

This cruel fact reminds us of the problem that it has not yet overcome, that is, the Chinese market.

Citibank pointed out that the decline in group profits is related to the dull performance of the Chinese market. Chinese consumers have reduced their consumption expenditure in Hong Kong and Macao due to the weakening of the renminbi.

But it is worth noting that Prada has a greater impact than other luxury brands including GUCCI.

Because the sales volume of many luxury brands in the mainland market has made up for the loss of Chinese consumers in overseas sales, Prada has also failed to get a boost from the mainland market.

Walter Woo, an international analyst at Zhao Yin, also said that even if Prada group had lowered its profit expectations for the Chinese market, the loss of profits would still be surprising.

"In the first two months of 2019, we didn't see signs that Prada's performance in China had a marked recovery," Woo said. "So we expect that Prada's performance in 2019 will be slower than peers, because it also needs time to upgrade China's product design and retail business."

In fact, this is not the first time that Prada has been frustrated by the Chinese market.

In 2016, when the Prada group faced its lowest performance in five years, sales fell by 8% and profits fell by 27%, the Asia Pacific market was the thorn in its flesh, and the most important Chinese market in the market was the most difficult to please.

At that time, Prada group realized that the reasons for the weakening of consumer demand, the global spread and stock market volatility were the reasons for this.

Similarly, luxury brands like GUCCI, CHANEL and other luxury brands decided to reduce or unify global prices. However, Prada group thought twice, and finally only allowed 80% of the stores in Hong Kong and Macao to reduce their prices by 10%.

The conservative stance of Prada group is also reflected in product innovation.

At that time, Prada had not had a killer package for a long time, and the price of most new bags was higher than that of the core customers.

At the same time, the radical sales strategy in previous years is also one of the reasons for the decline in profits.

It was not until 2016 that Prada changed.

Began to deep shop, increase entry level products, and bring new options such as organ bags and saddle bags.

In fact, Prada group did not have the opportunity to grow in China. In the first two months of 2018, it benefited from the growth of China's market demand, and the group's sales grew by 7.5%.

Such excellent performance proves that the Chinese market is still interested in it.

Perhaps Prada group's next step is to adhere to the younger strategy and deepen the Chinese market.

In December 2017, Prada launched the first e-commerce platform in China, selling all kinds of products.

In May 2018, after Beijing's hualian's high-end department store SKP landed in Xi'an, Prada group also opened 7 stores in one breath, including three Prada, two Miu Miu and two Church shops.

All these initiatives show the determination of the Prada group to lay the Chinese market.