Bloomberg News

Prada Forecasts First-Half Profit Gain on Expansion in Asia

June 03, 2011

(Updates with details on store openings in third paragraph, sales by brand starting in eighth.)

June 3 (Bloomberg) -- Prada SpA, the Italian luxury-goods company planning to sell shares in an initial public offering, forecast growth of at least 46 percent in first-half profit as it opens more stores in Asia.

Net income in the six months ending July 31 is unlikely to be less than 150.7 million euros ($218 million), Milan-based Prada said today in a filing to the Hong Kong exchange. The maker of Miu Miu bags and Church’s shoes reported profit of 103 million for the same period of last year.

The company, which had 319 directly operated stores at the end of January, said it plans to open about 80 new outlets in the current fiscal year, including 25 boutiques in Asia Pacific. Prada expects to add about 70 directly operated stores in the region by Jan. 31, 2014, including more than 30 in China.

“We believe that there is still substantial potential for growth in Asia Pacific,” Prada said in the filing.

Prada, which has set June 24 as a tentative listing date, follows European companies including L’Occitane International SA in seeking to sell shares in Hong Kong, where IPOs reached a record last year. By listing there, the Italian company is aiming to tap local funds as individual investors bet on the luxury-goods industry’s growth in Asia. Bagmakers Coach Inc. and Samsonite LLC are also planning to sell shares in Hong Kong.

Chinese Growth

Mainland China will remain the fastest-growing market for luxury goods in 2011 as sales rise 25 percent to 11.5 billion euros, consulting company Bain & Co. said May 3. The country is on course to become the world’s third-largest luxury market in five years, it predicted.

Prada said today that profit attributable to the owners of the company in the fiscal year ended Jan. 31 was 250.8 million euros. Net revenue in the year was 2.05 billion euros.

Miu Miu, the maker of 595-euro patent-leather clutches, was Prada’s fastest-growing brand last year, with sales rising 40 percent to 354.5 million euros, the company said. Asia Pacific accounted for 35 percent of the brand’s revenue. Prada said it plans to increase the number of Miu Miu’s directly operated stores in the region to 55 from 25 by Jan. 31, 2014.

As well as increasing “significantly” investment in marketing and communications, Prada plans to host a Miu Miu fashion show in Shanghai this year “to enhance its growing brand recognition in Asia,” the company also said.

Leather Brogues

Sales at the Prada brand climbed 30 percent to 1.61 billion euros in the 12 months through Jan. 31, the company said. Revenue at Church’s, the Northampton, England-based maker of 375-euro leather brogues, rose 21 percent to 53.1 million euros, while revenue at the Car Shoe brand fell 3.2 percent to 17.9 million euros, the company said.

Intesa Sanpaolo, Credit Agricole SA’s CLSA Asia-Pacific Markets, Goldman Sachs and UniCredit SpA are managing the IPO. Mizuho and Industrial & Commercial Bank of China Ltd. are providing assistance as so-called joint leads, according to three people familiar with the sale.

--Editors: Paul Jarvis, Robert Valpuesta.

To contact the reporter on this story: Andrew Roberts in Paris at aroberts36@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net


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