Ports Design Slides in Hong Kong as Mirae Cuts Rating on Store Closures
Ports Design Ltd., the clothing designer and retailer that runs Giorgio Armani and Versace outlets in China, dropped the most in seven months in Hong Kong trading on store closures.
Ports Design fell as much as 10.3 percent to HK$19.06, the biggest intraday decline since Feb. 9, before trading at HK$19.58 as of 11:10 a.m. in Hong Kong. The benchmark Hang Seng Index was little changed.
The retailer closed 60 stores while opening 33 in the first six months of the year, leading Selina Sia, Hong Kong-based regional head of consumer research at Mirae Asset Securities Co., to downgrade the stock. Ports Design yesterday reported net income rose 1.4 percent to 209 million yuan ($31 million).
“I was disappointed by the shop closures, which was more than anticipated,” Sia said in a phone interview. She cut Ports Design to “hold” from “buy” and reduced her share-price estimate to HK$21 from HK$24.
Goldman Sachs analyst Caroline Li maintained her “sell” rating on the clothier because she said she doesn’t “expect a meaningful recovery in store growth.” Li reduced her share-price estimate on Ports Design to HK$18 from HK$18.9.
“Global luxury brands are becoming increasingly available in China, and Chinese consumers are becoming more knowledgeable on fashion brands,” Li said in a note to clients. “Ports faces the challenge of not being a true global luxury brand.”
Ports Design had 329 stores in China, including Hong Kong and Macau, as of June 30.
Today’s decline extended Ports Design’s slide this year to 17.5 percent, compared with a 5.7 percent drop for the Hang Seng Index.
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