Prada Hit by China Woes

As Prada is seeing a disproportionate level of decline in its Prada brand which had previously been an area of strength, analysts believe the price differentials in China are a major issue

Paul Swinand 16 September, 2015 | 1:50PM

Wide-moat rated Prada (01913) announced first half 2015 financial results, and although worries persist in China and Asia, some stabilization leads us to believe sales and profits should not continue to decline. Preliminary sales and revenue figures were disclosed August 7, up 4% in euro but down 6% in constant currency.

Despite the risks, we remain optimistic for the long run

Analysis of the sales details shows some bright spots in areas such as footwear and in the Miu Miu brand, but the largest segments of Leather Goods, Greater China, and the Prada brand are stable but still negative. This suggests to us that some strategic issues such as store locations and brand positioning exist but are also fixable in the long run.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Prada SpA31.55 HKD0.16

About Author

Paul Swinand  is an equity analyst at Morningstar covering department stores, luxury goods, sporting goods, apparel and footwear.

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