Prada SpA share price down, projects slowing luxury sales growth and plans to expand menswear business

Prada SpA posted its largest shares decline in nine months after it projected slower sales growth in 2014 due to decreasing demand in Europe and China.

The 2013 net income of the company was flat, in comparison to the 45% increase that was reported in 2012. In 2013 Prada posted a profit that failed to reach the analysts estimates. The company made an official statement revealing its belief that same-store sales are going to increase at a “low single-digit” pace during the current financial year, which is to end in January 2015. Prada SpA also forecast a “mid single-digit” profit in 2016.

Prada SpA posted a 2013 revenue that amounted to 3.59 billion euros (4.95 billion dollars), which is a 9% increase of the revenue it posted in 2012. However, the company explained that currency fluctuations influenced on its 2013 profit, which rose from 626 million euros in 2012 to 628 million euros.

One of the analysts, who work for Nomura Holdings Inc. – Tanuj Shori, wrote in a research note, which was cited by Bloomberg: “Fourth-quarter bottom line was significantly lower.”

In order to deal with its current problems, Prada SpA revealed that about 120 new stores of the brand are planned to be opened until the end of 2016. The company also announced that 50 of these stores will be for menswear only.

The initiative is part of the companys plan to increase its growth over the next couple of years. Prada is also focused on expanding the Miu Miu label, which is scheduled to open about 70 stores by the end of 2016. According to the companys statement, the Miu Miu brand should be able to post sales estimated to about 800 million euros in 2016.

Prada SpA said that it considers an investment such as this one the right step towards a “strong future growth”. In addition, the companys womens fashion and accessories brand also plans to launch a new fragrance in the period between July and December 2015.

Prada SpA fell by 5.02% in Hong Kong to close the session at HKD 58.65 per share, marking a one-year change of -25.38%. This was the biggest daily drop since June. The company is valued at HKD 158.01 billion.