Cai Xukun's Endorsement Of Prada's Sales In China Began To Slide.

After Cai Xukun endorsed, Prada (PradaSpA) (Prada), which suffered the biggest customer group dispute, was deteriorated, including a big Chinese market in the luxury market and a recession in the Asia Pacific market. The net profit of the medium term net profit rose only through the 77 million euro tax revenue.

By the end of the first half of June, Asia Pacific market sales of Prada Group recorded a 4% decline, from 519 million 600 thousand euros to 498 million 600 thousand euros, accounting for 34.4% to 32.2%. This competitor Gucci Gucci and LouisVuitton Louis Weedon show the most robust market, Prada Group continues to lose its share and competitiveness.

The first half of the Italy group's Asian Pacific market's 6.4% fixed exchange rate decline was incomparable with the organic growth rate of 16.3% in the same period of Gucci and the comparable growth rate of the retail market in Asia Pacific market as high as 29%, while the LVMHMo tHennessyLouisVuittonSE (MC.PA) Lu Wei Hun Group Asia Pacific market recorded an organic increase of 18% in the first half of the year.

The SalvatoreFerragamoSpA (SFER.MI) Ferragamo, BurberryGroupPLC (BRBY.L) Bobury and Herm sInternationalSCA (HRMS.PA) Hermes International Group, which have disclosed their performance, have strong double-digit growth in the Chinese market, while Prada group said that in the first half of the year, the group fixed sales rate in the big China market recorded a 5.1% decline, while the euro sales fell 2.3% to 336 million 600 thousand euros.

The Italy group attributed the poor performance of the Greater China to the recent social events and exchange rate fluctuations, resulting in a decline in the Hongkong market, and indicated that it was eased by the good trend in the mainland of China and the support of local advertising initiatives.

However, in addition to Gucci, other strong performance of soft luxury colleagues said that the Hongkong market had no impact on its performance.

While all the competitors praised the strong double-digit performance of the mainland market, Prada group said in its statement that the mainland China had a positive performance, while the group's core leather sales in the Asia Pacific and Middle East markets were depressed, which offset the increase in the European, American and Japanese markets.

In June this year, Prada exposed a video of advertising video played by Chinese social media "traffic star" Cai Xukun in social media, followed by a men's show in Shanghai. The market is worried that the new marketing strategy of Italy group may further weaken its profitability.

According to the China Daily, the advertising and publicity costs of Prada group rose by 8.8% to 101 million 500 thousand euros in the first half of the year, while the rate of advertising and publicity increased by 40 basis points to 6.5% on a year-on-year basis, which was smaller than that of the whole year of 2018.

Data show that in 2018, Prada group advertising rate increased by 60 basis points to 6.6%, advertising and public relations costs rose 12.2% to 207 million 300 thousand euros.

PatrizioBertelli, chief executive of the group, commented on the interim results, saying that the company stopped the seasonal price reduction strategically and restructured the wholesale channel, while all the products in the full price range and all major markets showed positive performance, indicating that this is the right choice. He also said that the price increase would enhance the consistency of the relationship with customers and enhance the value of products.

In the statement, PatrizioBertelli reacted against the electricity supplier's disgust a few years ago, and praised digital innovation as the key to the competition in the changing market. The company will focus on promoting digital technology development and improving the efficiency of decision-making.

Before the release of the China Daily, Prada had already been unanimously sung by the big Wall Street firms. Citigroup, Goldman Sachs and Lyon all gave Italian company a "sell" rating, and Lyon's target price was as low as HK $17. The main concern of the group is that the Italy group will restructure its wholesale channel, which will affect sales and profit margins. Besides, the marketing cost may be increased due to the promotion of the Chinese market.

In 2018, after the EBIT core business profit margin hit a new low of 10.3%, in the first half of 2019, as predicted by a number of agencies, Prada group's EBIT profit margin further dropped to 9.6%, down 170 basis points, down 13.2% to 150 million 500 thousand euros, and 173 million 400 thousand euros in 2018 compared to the same period in 2019.

Before the mid term results were released on Thursday, the market was very concerned about Prada's release. As an industry representative for five consecutive years, it was an important supplement for investors to predict the industry based on the announced performance of Lu Wei hin and KeringSA (KER.PA).

On Monday, NoAgency analyst Tang Xiaotang released a forecast in the FlashFashion public number that Prada's core earnings data will continue to decline in the first half of the year.

On Thursday night, in a briefing by NoAgency to customers, Tang Xiaotang said that the marketing costs of his worry were better than expected, indicating that the Italy group is still trying to control costs, and the growth rate of less than 9% is more restrained than that of some peers or even up to 20% of the growth in marketing costs.

Italian company is the only large luxury group that failed to follow the start of the luxury market in the second half of 2016, but continued to decline. The company's profit has been declining for five consecutive years, and its income has picked up slightly in 2018 after falling for four years.

Tang Xiaotang said that the current situation is very embarrassing for Prada. The rise of the luxury goods industry ended in the first half of 2019, and competitors are more aggressive than Italy group. Prada is very passive for controlling costs. The analyst even worried that if the luxury industry entered a new recession, Prada might be put on sale.

By the end of the first half of June, Prada group's revenue rose 2.27% to 1 billion 570 million 100 thousand euros, better than the market expected 1 billion 550 million euros, of which sales revenue increased 2.37% to 1 billion 546 million 400 thousand euros, compared to 1 billion 510 million 600 thousand euros in 2018. During the period, the fixed exchange rate of group retail business fell 3.1%, the euro dropped 0.4% to 1 billion 231 million 900 thousand euros, wholesale income rose 14.9% to 314 million 600 thousand euros, and the fixed exchange rate increased 13.7%.

For fixed exchange rates, Prada, MiuMiu and Church 's rose by 1.4%, down 8.4% and 2.7% respectively; clothing, footwear and leather goods rose by 5.3%, 1.8% and 1.5% respectively.

Benefiting from PatentBox tax incentives, Prada's net profit rose by 55.7% to 154 million 900 thousand euros in the first half of the year, and its gross margin fell slightly 30 basis points to 71.7%, while the EBITDA profit margin dropped 150 basis points to 31.2%.