Prada Sees Growth as Product Pricing Helps Earnings Rise
Prada SpA (1913), an Italian maker of $1,150 studded leather slippers, said it remains confident of succeeding in a challenging economic climate after a policy of cutting discounts helped profit beat analyst predictions.
Net income in the 12 months ended Jan. 31 rose 45 percent to 625.7 million euros ($811 million) from 431.9 million euros a year earlier, Milan-based Prada said today in a statement. Analysts expected profit of 618 million euros, according to the average of 29 estimates compiled by Bloomberg. Fourth-quarter profit gained 37 percent to 217 million euros.
Prada limited markdowns in the final quarter of the fiscal year as same-store sales growth decelerated from the previous three months, mainly because of the later timing of the Chinese New Year in 2013. The full-price policy and new stores helped support margins, with earnings before interest and tax widening to 27 percent of sales from 24.6 percent a year earlier.
“The group remains confident that the strategy which has been coherently deployed in recent years with regard to brand positioning and retail expansion will again be a key success factor for the forthcoming fiscal year, even in a general economic environment that remains challenging,” Prada said. The number of directly operated stores as of Jan. 31 rose 19 percent from a year earlier to 461 outlets.
The earnings were released after the close of trading in Hong Kong, where the company’s stock is listed. Prada shares fell 1.5 percent to HK$77.10 today, giving the owner of brands including Church’s and Car Shoe a market value of HK$197.3 billion ($25.4 billion).
“Prada represents a structural-growth story, supported by a strong store opening plan and compelling like-for-like growth, with substantial margin upside potential across both flagship brands, Prada and Miu Miu,” Allegra Perry, an analyst at Cantor Fitzgerald who recommends buying Prada shares, wrote in a report last week. “We see a significant opportunity in Asia where the group is under-penetrated.”
Prada proposed a dividend of 9 euro cents a share, almost double the year-earlier payout of 5 cents.
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