Analysts, Observers Weigh in on Prada’s Wholesale Rationalization

MILAN — Short-term pain for long-term gain. This was the general view taken by analysts following Prada SpA’s decision on Tuesday to further cut back its wholesale network. This is an “additional near-term headwind” for the group, said Rogerio Fujimori at RBC Europe Limited. “While clearly positive for long-term brand equity/exclusivity, this decision should weigh on sales performance this year (along with its previous decision to remove end-of-season markdowns) and drive another leg of consensus downgrades for Prada Group.” Fujimori also believes the move is “consistent with Prada’s aim to enhance brand desirability by cutting exposure to gray market risks and adapting to ongoing consumer shift to e-tailers.” Equita analyst Paola Carboni said Prada’s move was “commendable” and, while determining a contraction in revenues in the short term, it will “in particular reduc[e] the parallel market to the advantage of the image and positioning of the brand.” In the long term, the reduction could be offset by “an increase in business through e-tailers, even though the switch will not be immediate,” continued Carboni. “The numbers could suffer a bit especially in Italy and Europe in the short term. To be honest, I did not expect this because Prada gradually set in motion the selective wholesale strategy

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