Strong sales lift Prada to record high

PUBLISHED : Wednesday, 08 August, 2012, 12:00am
UPDATED : Wednesday, 15 August, 2012, 11:11pm


Hong Kong-listed shares in Italian luxury fashion label Prada climbed to a record high yesterday as it outperformed other players in the market with strong first-half results.

Prada rose nearly 8 per cent yesterday afternoon before closing at a record HK$57.25, up 6.7 per cent, as analysts hailed it the top stock to buy in the consumer sector.

The company released its preliminary sales figures on Monday night, saying sales revenue jumped 36.5 per cent to Euro1.5 billion (HK$14.41 billion) for the six months to July. Same-store sales in its directly managed stores rose 19 per cent year on year. 'Prada is doing exceptionally well and taking market share from its peers thanks to greater store expansion and better same-store sales growth,' said Aaron Fisher, head of consumer and gaming research at CLSA. '[It] is driven by exceptional design and quality and delivering consistently more appealing products. In particular, emerging market customers are trading up from logo-heavy products to more sophisticated designs, which is a long-standing hallmark of Prada's.'

He expected Prada to book first-half earnings growth of 63 per cent.

William Hutchings, an analyst with Goldman Sachs, said in a research note that Prada had shown strong momentum in global markets and outperformed other global luxury companies like LVMH, Gucci and Hermes in the past six months.

He also noted the company had seen a significant slowdown in the second quarter in its home market of Italy, mainly because of a decline in its wholesale business there. 'Prada continues to be committed to actively reducing brand exposure to the wholesale channel in Europe, which should be margin accretive and positive for brand equity,' he said.

The Milan-based firm, which owns the Miu Miu and Church's brands, has gained 63 per cent in Hong Kong trading this year. That compares to an 8.8 per cent increase in the benchmark Hang Seng Index.