Who Is More Suitable For Prada'S GUCCI And LVMH?

Luxury brand in Italy

The 2018 autumn and winter series of men's wear show has just come to a close in Milan, and buyers have been well received. Shortly after that, Prada again became the focus of a rumor.

According to the world clothing and shoe net, Prada group's share price has risen by 20.6% since January 2nd, and it closed at HK $34.15 on Wednesday.

Rumors that will be acquired.

In Prada, the spokesman declined to comment on the rising share price and selling rumors.

However, an analyst who asked not to be named in Milan said that although he did not know any potential pactions, he pointed out that

Group and Kai Yun group's financial ability, the two most likely to acquire Prada, and that Prada is more suitable for the latter.

Prada currently has a market value of HK $87 billion 900 million, or about US $11 billion 200 million.

After several failed attempts, the Italy brand finally went public on the Hongkong stock exchange in June 2011, selling nearly 17% of its capital, mainly to promote the expansion of its retail network.

Miuccia Prada and her husband Patrizio Bertelli are the main shareholders of the group. At present, the group owns brand Prada, Miu Miu, Car Shoe and Church "s.

In 2016, Prada performance entered the most doldrums. In April, the company released the 2015 fiscal year report, which showed that the brand sales decreased by 8%, profits fell 27%, and fell to 330 million euros, becoming the worst achievement in 5 years.

Prada once again blamed the decline in its biggest market, Asia.

In its earnings conference, it said that Europe's performance was good, with a boost of 5%. In addition to Japan's bullish rise in Asia, Macao, Hongkong and Mainland China were all hurt by consumer demand, global spreads and stock market volatility, resulting in a 16% decline in Prada sales in the past year.

Since then, Prada has entered a long pition period.

Although Prada has not released its year-end financial performance in 2017, the group has made a forecast of its profitability in the first half of September last year in September.

But Bertelli said he had a positive attitude towards the long-term digital pformation of the group. "We are confident that our strategy is the best way for companies to achieve steady growth in revenues and profits, although we realize that the results are longer than expected.

To be sure, our cash flow and balance sheet remain stable, allowing us to focus on creating value for shareholders in a larger time frame. "

Bertelli said.

Although Prada showed signs of recovery in the Asia Pacific region, sales of clothing and leather goods all showed positive results. But in the first half of fiscal year ended July 31st, net profit fell by 18.2% to 116 million euros, and revenue fell 5.5% to 1 billion 460 million euros.

Analysts believe that Prada's aggressive way of opening up is the first crime of falling profits.

According to the financial report, in the 2015 to 2016 year, Prada opened 29 new stores and closed 5, of which 8 were in the Asia Pacific region, and another in the United States, the Middle East and Japan.

As of January 31, 2016, the number of Prada's total stores reached 618, but due to the high operating costs of these stores, these stores did not bring corresponding investment returns to the group, while sales in direct outlets in the Asia Pacific region declined by 4.4%.

Also in the 2015 to 2016, luxury goods ushered in a wave of shops in the Asia Pacific region.

Gucci closes the store of Queen's road in central Hongkong. Burberry closes 10 stores and will continue to close 5 in fiscal year 2016. The LV LV, Gucci, Prada and other 11 luxury brands have 34 outlets, and the number of new outlets is only 14.

In the process of pformation, pricing is also a major problem for Prada.

Luca Solca, a luxury industry analyst at Paris Bank of France, analyzed the situation of Prada recently, comparing it with Chanel and Gucci. The price range of goods sold in the latter two is obviously wider, "this is a business strategy to attract more buyers".

However, "Prada most of the new handbags cost more than the core customers' consumption," says Baines Ortelli analyst Mario.

The price of US $3500 (about 23 thousand yuan) will enhance the competitive circle of the brand, and it may be Dior's super line luxury brand.

Having realized this, Prada has greatly increased the entry level product, which is priced between 564 and 1126 US dollars, accounting for 18% of the total merchandise.

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By 2017, after a period of more than a year of pformation, the performance figures did not improve, but became deeper and deeper. Sales and profits both declined.

The main reason for the deterioration is that the company's direct outlets are not performing well, and the wholesale channel has increased by 15% over the same period.

Prada decided to continue the store renovation plan in 2017 and try the new retail concept store.

Bertelli expects that 30-40 stores will be opened from 2017 to 2018 to display new products. "These Limited stores are fun and time consuming and can create surprises".

A week ago, Prada just landed the latest Flash store in Macao, called "Prada Spirit", and will bring this flash shop to Beijing, Shanghai, Hongkong and Taipei during the Chinese New Year.

Digitalization is another trend that Prada wants to catch up with.

Prada started the business on the waterline from the 2016 autumn and winter series, and used the concept of "show to buy" to cooperate with Net-a-Porter, Mytheresa and Mr Porter.

At the end of last year, Prada officially launched its first e-commerce platform in China.

Chiara Tosato joined the Prada team in March this year and served as general manager and digital business director. She said that China's prada.com website is a key step in the whole group pformation strategy, which is based on three strategic pillars: to boost online sales through the new e-commerce platform, develop multi-channel shopping experience, integrate purchase mode and increase brand digital investment.

Tosato points out that China is the strategic focus of the group. However, in fact, the Chinese market is almost the main battleground of all luxury brands, but Prada is more dependent on the Chinese market than most other brands. Half of the company's revenue comes from Asia.

Prada has been delivering continuous information and actions to the outside world, but it has achieved little in two years. Executives have consistently attributed the decline in performance to bad overall environment and the biggest downturn in Asian market performance.

But the quality problem of the most criticized brand is rarely mentioned.

Before the listing in 2011, Goldman Sachs had put Prada on the Chinese mainland with many factories on the table. However, this quality risk factor did not hinder the listing of Prada, because at that time more buyers were only concerned about the "Made in Italy" logo on the bag, from flash store to electricity supplier, these channels were just buildings on the ground, and the product itself is the foundation of a brand.

At the same time, Prada also dropped its team on the way to make money in recent years.

In addition to the 2012 killers in the movie "spy 4", Prada has never made any breakthroughs in design. Even though the team is actively attracting young designers to enter the group, the aging of management obviously lags behind other brands.

Prada Online China's e-commerce platform may be the beginning of a new round of growth plans. However, it is difficult to determine whether Prada can win the fruits of the big luxury brands when it begins to add Chinese electricity providers.

And if the acquisition rumors are confirmed, Prada's development prospects will be plunged into many uncertain factors.

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