Citi: Prada brand's resilient performance offsets Miu Miu decline; maintains "Neutral" rating on PRADA (01913)

Citi issued a research report stating that PRADA's (01913) third-quarter sales were in line with market expectations. The bank maintains its "Neutral" rating with a target price of HK$39.9. PRADA's (01913) third-quarter group sales came in at 1.49 billion, in line with market expectations; excluding Versace, organic growth at constant exchange rates was 1%, compared with 7% growth in the previous quarter, while market expectations were for flat growth. Among this, Prada retail rose 1%, in line with market expectations, with same-store sales broadly flat; Miu Miu retail fell 3%, versus market expectations of a 1% increase, though it was flat excluding the Middle East; wholesale business rose 12%. The bank noted that the slowdown in growth was affected by weaker footfall in China and Japan, as well as higher comparative bases in the US and South Korea. However, management disclosed on the conference call that performance in September and October had improved slightly versus July and August, that market reaction to the Miu Miu Spring/Summer 2027 collection has been strong since its launch, and that Versace plans to increase investment in 2027, which may limit room for narrowing losses. Citi expects market forecasts for FY2026 and FY2027 sales and EBIT to remain broadly unchanged, and believes that with the Prada brand's relatively resilient performance, slightly positive sales in October, and stabilizing earnings, the share price will see a mildly positive reaction.