Prada'S "Queen" Has Great Potential For Revival.

Following Gucci, relying on product and digital strategy, Prada will be the next most luxurious brand in Italy. By the end of 1 this year, Prada group (01913.HK) recorded 2016 euros in revenue in the 2016 fiscal year, down 10.3% from the same period last year, and recorded a profit of 278 million euros (2 billion yuan), down 15.9%, far below the 27% decline in 2015. It is noteworthy that group sales in Asia, the main market in Greater China, began to rise in the third quarter of last year, and continued to grow in the fourth quarter. The group's annual sales decline narrowed from 15% in the first half to 10%.

The report of MCG's haircut research firm insists on the market potential of Prada group and its operating profit is 2% higher than that of the bank. The bank pointed out that the sales performance of Prada group in the second half of the fiscal year is benefited. Luxury goods With the recovery becoming more positive, Prada and Miu Miu brands have improved significantly. It is expected that the same store sales decline in the first half of the new financial year will further narrow to 2%, and will grow by 3% in the second half of the year.

During the period, the retail sales decreased by 13.9% according to the current exchange rate, while the fixed exchange rate decreased by 13.1%. The group points out that the performance trend shows that the market decline in the second half of this fiscal year has narrowed, especially in the last few months of last year. Up to now, the group has opened 28 new outlets and closed 26, 2 new shops to 620 stores, and refurbished 40 stores. In 2017, 50 stores will be renovated.

It is noteworthy that the sales volume of its wholesale channels rose by 13.4% according to the current exchange rate, while the fixed exchange rate rose by 14.6%. The growth of the channel is mainly due to the new partnership between Prada group and the world's leading e-commerce platform. In August last year, Prada group's products began to be sold on Net-a-porter and Mytheresa.com. The net sales in the Asia Pacific market decreased by 14.2% according to the current exchange rate, while by fixed exchange rate it dropped by 12.1%. The group said China's mainland had a huge impact on the region's performance. The first six months recorded a decline of two digits, but it recovered gradually in the second half of the year and resumed growth at the end of the year.

The net sales in Europe dropped by 7.9% according to the current exchange rate, while by fixed exchange rate it dropped by 5.2%. The decline in tourism due to terrorist attacks has had a huge impact on French sales, but in the last quarter, Prada group's performance showed a marked improvement. Russia's performance was strong, recorded two digit growth. In the UK market, it successfully reversed the first half of the year and recorded a healthy growth rate at the end of the year. The net sales in the Americas decreased by 12.7% according to the current exchange rate, while by fixed exchange rate it dropped by 12%. The net sales of the two channels in the United States decreased, while Brazil and Mexico recorded an increase in the second half.

In terms of category, the improvement of footwear and clothing in the second half of this financial year is particularly evident, with an increase recorded. In addition, Prada said it would speed up the production cycle of garment series to compete for more market share. Some analysts believe that the 2016 autumn winter series is the most excellent series of Prada in the past two years. The new Prada Cahier handbag launched in the season has become the latest hot selling style, and has strengthened its brand style under the leadership of Miuccia Prada, the brand leader.

Compared with other luxury brands, Prada is more dependent on the Asia Pacific market and accounts for more than 1/3 of its revenue. Some analysts point out that as one of the world's most famous luxury brands, Prada's moat is still very strong, and its brand effect is not built overnight, nor will it suddenly lose. Prada group management emphasized the sales performance in the Chinese market while improving the operation efficiency of the Hongkong market. The core profit margin of Asia is still the highest, while China's EBIT is the highest.

In August last year, Prada, a handbag maker, returned to the handbag strategy and decided to implement a price reduction strategy for its products. In addition, Prada also launched customized services for customers with special requirements. The group said it would re evaluate the price of goods every month and control the price difference of goods in different regions within 10%.

In the summer of 2016, the average retail price of handbags sold by Prada was declining, and the cost of the new handbag was 18%, according to Paris bank data. In addition, Prada also provides consumers with a large number of choices to customize their favorite handbags. The average handbag has an average of 29 editions, while its competitor LV has only 80 handbags on its online platform, with an average of 11 versions per handbag, and the average handbag of Gucci and Burberry has only 14 editions.

It is noteworthy that in December last year, according to the survey of RBC Capital Markets, Gucci became the preferred handbag brand in China's list of wish list of wealthy female consumers, followed by Chanel, Prada ranked third, ranking higher than Louis Vuitton and Herm s.

Magri published a research report last year that handbag business accounted for 60% of the core brand of Prada, which is being improved by product innovation, and sales of Miu Miu shoes are also showing signs of growth. Earlier analysts said the survey found that part of the handbag style of Prada had to wait for a month before it was available. I believe this is a strong positive message. Handbags will help drive sales and profit growth. It is expected that same store sales will be flat in 2018, while the first half of 2019 will return to positive growth.

Patrizio Bertelli, chief executive of Prada group, said that Prada has set up a new team to develop digital strategy. In 2017, the group will also focus on developing the "Prada365" digital marketing strategy put forward at the end of last year, changing its traditional advertising strategy and constructing "a continuous stream of visual data", that is, a full dimensional platform containing media from the print media to the Internet and social media.

" Prada365 "The plan will no longer be as rigid as the single advertising mode released every quarter. By integrating a series of different concepts, settings, photographers and models, the brand can shoot and distribute the new products to the major platforms in a timely manner, and the entire advertising process will be more free and flexible, eventually becoming a" all-weather rolling Prada ".

The group's first electronic business platform is expected to open to consumers in China, South Korea, Australia, New Zealand and Russia at the end of the year. Other countries and regions will be launched in 2018. In addition, the official website of Prada and Miu Miu also plans to launch a new version in the summer to improve the user experience and enhance the attractiveness of the brand. Patrizio Bertelli stressed that the group's emphasis on digital spanformation is aimed at integrating offline and offline businesses. Distribution channel And turn the brand's social media value into product sales to stimulate growth.

Last May, the Prada group announced the start of a non family management restructuring aimed at bringing new blood to the management of the group. In an interview, Patrizio Bertelli also pointed out that all kinds of changes will be accepted. Fashion is derived from continuous innovation and opportunities. If a certain rule is set, it is wrong. There is no right or wrong in fashion. The important thing is that the brand needs to find a suitable development mode.

Patrizio Bertelli said that in order to attract more young consumers, the group will pay more attention to the use of social media. He admits that after the launch of Apple's iPhone6, social media has changed the way people accept information. In addition, the luxury consumer group is 3 times the original market, and these are the users of social media. Prada group needs to seize this opportunity. He also cited an example, such as Kim Kardashian's 80 million followers in social media, which is surprising.

Thomas Chauvet, managing director of Citibank, expressed optimism about the development prospects of Prada group in 2017 after the report meeting, and was surprised by the determination of Prada group's digital spanformation. It is expected that after the effective improvement of product structure and implementation of marketing strategy, the performance of Prada group will be able to resume growth at the end of the year. Lyon quoted management as saying that in February and March this year, the sales trend of group Prada continued to grow in the second half of last year, and the recovery in China and Europe led to the Asian business outperforming the industry. Thanks to the rebound in performance, Prada's stock price has risen more than 30% since the beginning of this year, and its market value is HK $87 billion 400 million.

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