Corporate Credit Rating for PRADA S.P.A.: A3 (Affirm)

modefinance published on its CRA website the Corporate Credit Rating for PRADA S.P.A. and the rating assigned to the entity is A3 (Affirm).

The company has a good capability of meeting its financial obligations. The high capitalization ensures low dependence on possible adverse macroeconomic conditions.

The reasons that have driven this decision are:

• The economic and financial profile of the Company is good with a very strong solvency profile and good liquidity. The only negative note is profitability, where it can be noticed a contraction over the analyzed periods. Nevertheless, overall profitability remains at high levels. Cash Flow is highly positive. The cash flow analysis revealed a very good situation in Prada's liquidity and cash management.
• Both for revenues volume (82 percentile in the distribution of peer comparable) and overall indebtedness level (80 percentile), the Company ranks in the top quartile of the peer of comparable, meaning among the best performers. Only in profitability the Company ranks on the median of the peer (36 percentile).
• Prada is a long established (it was founded in 1913) and worldwide-known fashion luxury group. It's going through a period of downturn in profitability, but with the launch of the e-commerce business the Group is expecting a turning point.
• Fashion industry is facing a generalized revenues’ contraction, ascribable to several reasons and Prada was subject to such macro-trend as well. Nevertheless, the Company over-performs the sector’s performance both in terms of liquidity and solvency, which reached a good level also in the peer group of comparables. Profitability, on the other hand, remains the weakest area of the Group, underperforming the overall industry.
• The Company is mostly subject to the macroeconomic situation of European and Eastern market, where most of the revenues come from. The general macroeconomic improvements registered worldwide, together with positive forecasts for 2018, are encouraging and could affect positively Prada.

The present Corporate Credit rating is issued by modefinance under EU Regulation N. 1060/2009 and following amendments.

The present Corporate Credit rating is Unsolicited: the rated entity and/or related third parties have not participated in the rating process and modefinance has no access to accounts or other relevant internal documents of the rated entity and/or related third parties.

Solicited and unsolicited ratings issued by modefinance are of comparable quality, as the solicitation status has no effect on methodologies used. More comprehensive information on modefinance Corporate Credit Ratings are available at this link.

The present Corporate Credit Rating is issued on MORE Methodology 2.0 and Rating Methodology 1.0. A comprehensive description of both methodologies, as well as information on modefinance Rating Scale and Mappings, is available at this link.

For information on historical default rates of modefinance Corporate Credit Ratings please refer to ESMA Central Repository and ESMA European Rating Platform.

The quality of the information available on the rated entity and used to determine the present rating was judged by modefinance as satisfactory. Please note that modefinance however is not in a position to guarantee the accuracy of those information. As such, modefinance can accept no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect.

The present credit rating was notified to the rated entity in order to identify potential factual errors, as prescribed by the CRA Regulation.The Rated Entity or Related Third Party has not purchased ancillary services from modefinance.

The rating action issued by modefinance was performed independently. The analysts, members of the rating team involved in the process, modefinance Srl and its members and shareholders do not have any conflicts of interest in relation to the Rated Entity and/or Related Third Parties. If in the future a potential conflict of interest is identified in relation to the persons reported above, modefinance Ratings will provide the appropriate information and if necessary the rating will be withdrawn.

The present Credit Rating is an opinion of the general creditworthiness that modefinance issues on the rated entity, and should be relied upon to a limited degree. The issued rating is subject to an ongoing monitoring until withdrawal.

Fabio Politelli - Head Analyst
fabio.politelli@modefinance.com
+39 040 3756742

Andrea Marion - Assistant Analyst
andrea.marion@modefinance.com
+39 040 3756740

Pinar Dilek - Responsible for Rating Approval
pinar.dilek@modefinance.com
+39 040 3756740