Prada Brand Performance Growth Leaps Away From LV Asia Pacific Yellow Light
Since Prada Group was listed on the main board of the Hong Kong Stock Exchange on June 24, 2011, the financial data handed over by the Group is as "beautiful" as its dress. In FY2012, Prada Group increased its net income by nearly 60% in only half a year. In the recently released annual report, Prada used a beautiful growth figure of 44.9% to "kill" a number of luxury brands with poor performance. Among them, the Asia Pacific region topped the 1 billion euro mark for the first time, with 35.6% of the total.
However, the risks of putting eggs in the same basket are self-evident. The vigorous anti-corruption campaign in the Chinese market has frightened many luxury brands. In its annual report, Prada also revealed that the growth in the Middle East region was up to 303%, and its stores in South America were only five.
Perhaps it would be a good choice to transfer the profit position, and Patrizio Bertelli, the CEO, also has this intention.
Prada accounted for 80%, and Miu Miu slightly decreased
Recently, Prada Group released its annual report for fiscal year 2012. As of January 31, 2013, the group's net income reached 625.7 million euros, an increase of 44.9% over the same period last year's 431.9 million euros. Net income increased by 29% to EUR 3297 million from EUR 2556 million in 2011. The retail net sales increased by 36.6% to 2.664 billion euros over the previous year, and the same store sales growth rate of retail stores was 14%.
Although many growth rates throughout the year were not "shocked" by the mid-term report, Prada Group stood out in 2012 when the growth rate of luxury goods declined sharply.
As the "big man" of the group, Prada has lived up to expectations. Its net sales rose 32.5% year on year to 2.648 billion euros, accounting for 81.4% of the group's net sales. Under the general weakness of the European market, Prada's European market grew significantly, with its net sales increasing by 22.3% year-on-year to 589 million euros from 411 million euros last year. The Asia Pacific market excluding Japan grew by 36.6%, ranking second. 38 new direct stores were added throughout the year.
Although the net sales of its subsidiary brand Miu Miu also increased to 512 million euros from 441 million euros last year, its percentage in the group's net sales decreased from 17.5% to 15.7%. Among them, the growth of Italian market was the most obvious, increasing from 67.1 million euros last year to 842.52 million euros, up 25.6% year on year. The Asia Pacific market and the European market, excluding Japan, grew by 16.8% and 16.6% respectively, ranking second and third. 32 new direct stores were added throughout the year.
The other two subsidiaries of the group shoes Brand execution: The net sales of Church's and Car Shoe increased by 15.6% and 15.4% respectively, but their percentages in the group decreased by 0.2 percentage points and 0.1 percentage points respectively.
It is obvious that under the leadership of Prada and Miao Miao, the business of shoes is far less than that of leather goods. According to the 2012 financial report, the net sales of leather goods by product line increased from 1.426 billion euros last year to 2.036 billion euros, up 42.7%. This is 2.7 percentage points higher than last year's 40%.
Shoes ranked second, with an increase of only 0.3 percentage points to 11.7% compared with last year. But this is due to the common contribution of the four brands. And Prada and Miao Miao are the main contributors clothing Its net sales increased from 512 million euros to 563 million euros, an increase of 9.9%, but an increase of 3% compared with 6% last year. From this point of view, clothing has the fastest growth in all product lines.
Asia Pacific market takes the first place in sales
Lock the second and third tier of China
From the perspective of regional markets, compared with last year, the net sales of each market increased. However, the growth rate in Italy, Japan and the Americas, the headquarters of Prada, all declined by about 1%, while the growth rate in other regions increased to varying degrees. Among them, the European market contributed 22.7% of the Group's revenue, and the net sales increased to 739 million euros from 540 million euros last year, with a year-on-year growth of 36.9% (34.4% at a fixed exchange rate).
The report shows that the retail network in the European market grew by 53.9% in the whole year, thanks to the 22 new direct stores.
The Asia Pacific region, which is dominated by the Chinese market, has once again become the largest market of Prada in the world, accounting for 35.6% of its sales. Prada Group's dependence on the Asia Pacific market dates back to 2009. According to the 2011 annual report released by the group, 2011 has been the third consecutive year in which the Asia Pacific region has held the first place in Prada Group's sales.
In the first half of 2012, the Group's sales growth in the Asia Pacific region was the most significant. As of the end of July, its net income growth rate was 34.9%, while that in Italy, the headquarters, was only 17%. Among them, Greater China achieved a net sales of 340 million euros, up 50.2%.
Although the sales growth in the last two quarters was not outstanding, for the whole year of 2012, Prada Group's net sales in Asia Pacific region exceeded 1 billion euros for the first time, reaching 1.16 billion euros, twice as much as that in Italy, the country of origin. The region accounted for 35.6% of the consolidated net sales. So far, the Asia Pacific region has achieved a good result of ranking first in the group's sales for the fourth consecutive year.
Of course, such achievements cannot be separated from the expansion of retail network. The report shows that as of January 31, 2013, Prada Group had increased its number of direct stores worldwide from 388 last year to 461. Among them, the number of stores in the Asia Pacific region increased from 115 to 130.
It is worth mentioning that 12 of the 15 new direct stores opened by the Group in the Asia Pacific market are located in Greater China. Prada locked in China's second and third tier cities in 2012, opening five new stores in Taiyuan, Shenyang, Jinan, Hangzhou and Hefei. Miu Miu chose to set up a new flagship store in Beijing, and the other three stores were located in Qingdao, Chengdu and Nanjing.
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In FY2012, the Group's net sales in Greater China reached 735 million euros through network expansion, up 35% year on year.
Early warning in Asian market
The report card delivered by the Asia Pacific market dominated by the Greater China region in FY2012 undoubtedly proved Prada's long-term vision of giving up Milan and choosing to list in Hong Kong.
According to McKinsey's analysis, in 2010, one third of Prada Group's sales came from the Asia Pacific market excluding Japan. The company's business growth in Asia is more than twice as fast as any other region in the world. By 2015, China will account for one fifth of the demand for luxury goods, and will account for the majority of demand growth.
Prada Group is listed as close to the mainland as possible, which will certainly be beneficial to future development. On the one hand, understand the current events and economic trends of the Greater China market, and on the other hand, focus on the promotion and development of other markets in the next step. It is believed that this is also one of the main reasons for the Group's clear listing in Hong Kong.
However, the luxury market in mainland China in 2012 is not optimistic. According to Bain's report, the annual growth rate of the luxury market in mainland China dropped to about 7% in 2012. At the same time, the growth rate of the Hong Kong market also slowed to about 10%.
In addition, under the combined effect of the continuous decline of the euro and the rise of overseas travel, Chinese consumers' overseas consumption has accounted for 60% of their total luxury consumption, leading to a slowdown in the growth of Chinese luxury consumption in the mainland.
The subsequent change of leadership in China, as well as the correction of social ethos, the fight against corruption of government officials, and the boycott of gift giving have become another major concern of many luxury brands. According to a study by Bain Company, 20% of China's luxury consumption expenditure is spent on official gifts and other aspects.
More media reported that this number is actually higher, accounting for more than half of luxury consumption, which to some extent reflects the problem of corruption. The Chinese government has ordered government officials to cut spending on foreign cars and expensive meals. When it comes to luxury consumption, the Chinese government demands more frugality.
Just as China has always had a tradition of reciprocity, reparations are also one of the major expenditures of the rich and officials. According to the 2012 Wealth Report released by Hurun Baifu, among the top ten gift giving brands favored by the rich, six are from the fashion field, two are watches, and one is jewelry, drinks, electronic products, and perfume. Prada ranked fifth in the fashion field and eighth in the overall list of top ten gift giving.
However, after nearly four years of development, the sales volume of the Asia Pacific market has accounted for one third of Prada Group. Although the Asia Pacific market delivered a beautiful financial report for Prada Group in 2012, the "early warning" of the slowdown of luxury growth has been sounded, and the risk of putting eggs in the same basket is self-evident.
Focus on the Middle East and South America
For 2013, Bain expects that the growth of luxury market in mainland China will improve. Although there are still some challenges and uncertainties in the overall business environment, especially the recent increase in the spread of H7N9 virus, the development of luxury goods in the Chinese market has been more turbulent. However, the slowdown of China's market growth also provides opportunities for major brands to re-examine and adjust their strategies.
"In the second half of 2013, the economy may not recover as expected," said Patrizio Bertelli, CEO of Prada Group. "In the future, we will focus on department stores in the Middle East, South America and the United States."
It is obvious that Prada Group has fully understood the Chinese mainland market and made adjustments to the strategy of the whole group in the first time. To develop the Middle East market and South America market to offset the reduction of consumer spending in the European market and reduce dependence on the Asia Pacific market.
In fact, as early as May 25, 2011, PRADA Spa and Al Tayer Insignia llc registered and established PRADA Middle East fzco in Dubai Bay Ali Free Trade Zone, United Arab Emirates, to deal with the development of Prada and MiuMiu store networks in the Middle East. The shareholders respectively injected 60% and 40% of the capital stock into the new company. Al Tayer Insignia Group is the largest luxury retailer in the Middle East, belonging to Al Tayer Enterprise Group headquartered in the United Arab Emirates.
After the rectification of the distribution network in the Middle East, the net sales in the "other countries" market in the report increased by 29% to 15.2 million euros. In 2011, the group opened two stores in Dubai, United Arab Emirates for the first time.
According to the 2012 financial report, "other countries" led by the Middle East have planned to expand their direct stores in the Middle East since 2011. As of January 31, 2013, 9 new stores had been opened. Net sales in the "other countries" region increased from 15.22 billion euros last year to 50.97 billion euros, an increase of 234.8%. Among them, the Middle East saw the fastest growth in net sales, with a year-on-year growth of 303% from 11.1 billion euros last year to 44.8 billion euros.
"We opened stores in Qatar and other regions in the Middle East, which we launched two years ago, so there is still room for expansion," Carlo Mazzi, vice president of Prada Group, said in an interview with reporters. "In 2013, about 80 new stores will open around the world."
It can be seen that expanding the retail store network channel is still the top priority of Prada Group in 2013.
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