Benefit record for Prada: 625.7 million euros

Friday, 05 April 2013
The Italian fashion house and accessories has gained 44.9 percent more in 2012, reaching a record net profit of 625.7 million euros. Net revenue in its last fiscal year amounted to a record of 3297.2 million. “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.

Prada's net profit in 2012 grew by 44.9 percent compared with the 431.9 million euros earned in the year 2011, the company said in a statement Friday. Net income also grew, in particular, 29 percent compared to 2555.6 million euro turnover last year.

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, explained the company’s management in a conference on Friday.

The Asia Pacific region has been the particular goldmine for Prada in the last fiscal year, as sales increased especially in the area (32.9 percent). Furthermore, grew Prada was two digits in all divisions. Thus, in Europe reported a "significant" increase of 28.6 percent, in the Americas, 23.3 percent, and Japan's 14.2 percent, Europa Press reported.

Sustained structural-growth story

The group stressed that "during the year has continued its growth path, based on expanding its network of stores operated directly by the company." At present, the group has 78 new stores opened in the last twelve months. The number of directly operated stores as of Jan. 31 rose 19 percent from a year earlier to 461 outlets.

“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.”

Shares of Prada, which more than doubled in 2012, are up 4 percent so far this year, outperforming a 4 percent fall in the benchmark Hang Seng Index. The company has a market value of about 26 billion dollars.

Prada proposed a dividend of 9 euro cents a share, almost double the year-earlier payout of 5 cents, highlighted Bloomberg.

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