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Prada shares climb on outlook for luxury maker

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by August 30, 2016 General

Prada shares rose as much as 15% after chairman Carlo Mazzi forecast the Italian luxury-goods maker will return to growth in sales and earnings next year, helped by cost-cutting and online expansion in Asia.

Prada store in Hong Kong. Asia expansion has helped the retailer.

This year “is a turning point and we are now firmly on the path to sustainable growth in revenues and earnings from as early as 2017,” Mr Mazzi said after the Hong Kong market closed.

First-half earnings before interest, tax, depreciation and amortization fell 25% to €330m, dropping slightly less than analysts estimated. 

Prada said it aims to double its e-commerce sales in each of the next three years by increasing the number of categories it offers online, particularly shoes, and expanding its social media activities.

Analysts at Sanford C Bernstein have said the Italian company has been hurt harder than rivals in the luxury industry because it’s been slow to invest in e-commerce and its handbags are too expensive. 

The company plans to offer online sales across China, Hong Kong and Singapore by the end of 2017, Mr Mazzi said.

Revenue for the six months ended July fell 15% to €1.55bn on weak demand in China and a drop in tourism in Europe after terrorist attacks. 

“The decline in sales was largely offset by the improvement in expense control,” wrote Linda Huang, an analyst at Macquarie.

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