Prada Shares Surge as Chairman Forecasts Improvement in 2017

MILAN, Italy — Prada SpA shares rose as much as 15 percent after Chairman Carlo Mazzi forecast that the Italian luxury-goods maker will return to growth in sales and earnings next year, helped by cost-cutting and online expansion in Asia.

This year “is a turning point and we are now firmly on the path to sustainable growth in revenues and earnings from as early as 2017,” Mazzi said on an Aug. 26 conference call after the Hong Kong market closed. First-half earnings before interest, tax, depreciation and amortization fell 25 percent to 330 million euros ($370 million), dropping slightly less than analysts estimated.

Prada said it’s doubling its e-commerce sales over the next two years by increasing the number of categories it offers online, particularly shoes, and expanding its social media activities. Analysts at Sanford C. Bernstein have said the Italian company has been hurt harder than rivals in the luxury industry because it’s been slow to invest in e-commerce and its handbags are too expensive.

Revenue for the six months ended July fell 15 percent to 1.55 billion euros on weak demand in China and a drop in tourism in Europe after terrorist attacks.

“The decline in sales was largely offset by the improvement in expense control,” wrote Linda Huang, an analyst at Macquarie.

The shares gained 12.4 percent to $HK24.45 as of 3:14 p.m. in Hong Kong. The results were released Aug. 26 after the close of trading.

By Thomas Mulier and Daryl Loo: editors: Matthew Boyle, K. Oanh Ha, Daryl Loo.