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PARIS / AFP
A slowdown in the Chinese market pushed Prada’s profits sharply lower last year, the Italian luxury company said.
Net profit dropped nearly 27 percent to just under 331 million euros ($378 million) in the 12 months to end-January, Prada’s financial year.
Group sales stagnated at 3.5 billion euros, while the contribution from Asia dropped because of Chinese weakness, Prada said in a statement.
“The economic situation on the Chinese market remains negative,” it said, leading to a 4.4 percent drop in sales from the Asia-Pacific region. Stripping out the impact of a strong dollar last year the drop was even higher, at just over 16 percent.
A weaker euro, meanwhile, helped
European sales as Asian and American visitors got a better exchange rate, and turnover in Japan also rose, helped in part by Chinese tourists buying Prada products in Japan. Revenues in the United States rose, but only thanks to dollar strength.
Prada said the drop in the group’s
bottom line was a result of costs related to itsretail network expansion which were not offset by any sales growth.
Prada’s net profit margin fell to 9.3 percent of sales from 12.7 percent a year
earlier.
It added, however, that its cost-cutting drive was beginning to bear fruit.
Prada held its dividend at 11 euros per share and said that the earnings outlook was clouded by economic uncertainty.
“Throughout 2015, the luxury goods market had to deal with an economic environment characterized by volatile financial markets and by heightening geopolitical tension in different regions across the world,” Prada chief executive Patrizio Bertelli said in the statement.
“These conditions are still present and 2016 is expected to be affected by instability which makes any short-term forecasts uncertain,” he added.
Prada is an Italian luxury fashion house, specialising in leather handbags, travel accessories, shoes, ready-to-wear, perfumes and other fashion accessories, founded in 1913 by Mario Prada.
Prada has commissioned architects, most notably Rem Koolhaas and Herzog & de Meuron, to design flagship stores in various locations. A duplex megastore was opened in Kuala Lumpur at the Pavilion Kuala Lumpur in late 2008.
Prada commissioned an unusual multi-purpose building called the Prada Transformer in Seoul. And 2009 saw the opening of a new store on Corso Venezia, Milan, designed by architect Robert Baciocchi, focussing on the Prada Made to Order collection. In June 2012, Prada returned to the Middle East with the opening of its largest boutique ever in Dubai’s Mall of the Emirates.