PRADA (01913) saw improved same-store sales for its Prada brand in the second quarter, prompting Citigroup to release a research note predicting a positive market reaction to the shares.

The group reported second-quarter sales of €1.62 billion, approximately 3% above market expectations. Excluding the impact of Versace, organic growth was 7%, accelerating from the 3% growth seen in the first quarter. Within this, wholesale revenue grew 21%, Prada retail sales increased by 6%, and Miu Miu retail sales rose by 3%.

Citigroup believes market forecasts have room for upward revision by a low single-digit percentage. The bank maintains a "neutral" rating on the stock with a target price of HK$38.

The bank noted that leather goods under the Prada brand showed the strongest performance, followed by its ready-to-wear collections (both menswear and womenswear), while footwear saw a slight year-on-year decline. For Miu Miu, growth was more evenly distributed across all categories.

Geographically, sales from Chinese customers grew at a double-digit pace year-on-year, while sales from Japanese and European customers remained flat. North American customers also recorded double-digit year-on-year growth.

The current market consensus for PRADA's 2026 fiscal year estimates sales of €6.42 billion with organic growth of 4%, an EBIT of €1.25 billion, and an EBIT margin contraction of 370 basis points year-on-year to 19.4%.