More Complications for Prada
Prada fails to leave its problems behind. Just after announcing its second consecutive year of stagnation, it has been known the departure of one of its historic executives.
The last event of the unfortunate serie has been the resignation of its CFO, Donatello Galli, who was in office for 12 years. According to the company, Galli left the group to pursue new career opportunities. Prada clarifies that there has been no disagreement with the executive, but the fact is that the exit of this historic executive coincides with the second consecutive year of sales stagnation.
Galli’s replacement will be who until now has been responsible of investor relations, Alessandra Cozzani.Cozzani has been the obvious choice. Galli has been responsible of presenting Prada accounting for more than a decade (including during the IPO) and his absence could create doubts among investors, so the company y has chosen a familiar face for those investors. Galli was the visible face of the company when the stock doubled its market value within two years of its debut.
Instead, the departure of the CFO comes at the worst time of Prada stock since its debut in 2011, trading at just over HK$ 23 per share, 70% below its highs of 2013 and even 40% below the value of its IPO, set at HK$ 39.5.
Prada repeated in 2015 its revenues of the previous year (€3.55 billion) after falling 1% in the preceding year. The strength of the dollar, the collapse of its business in China (a country where it had grown significantly in recent years) and the terrorist attacks in Paris have significantly hurt its results. In addition, it is taking its toll erratic policy online sales. While these sales are growing at twice the luxury industry sales through traditional channels, in the case of Prada they amounts to just 1% of its total revenues.
To offset this trend, Prada has launched a savings plan costs and a plan to rationalizing its store network, although it is still too early to estimate the result that these measures may have.
Disclosure: The Luxonomist is not liable on the views expressed in the article. The text has been written freely expressing ideas, without receiving any compensation for it. The author does not have any business relationship with any of the companies whose shares are listed in this article.
(Featured Image: Prada Fall/Winter 2016/17 – Photo: Pietro D’aprano)