What to Read Next

Prada's profit growth slows, Europe still under pressure

20 December 2013

HONG KONG/MILAN (Reuters) - Hong Kong-listed Italian luxury fashion house Prada SpA (HKG:1913) reported a lower-than-expected rise in quarterly profits on Friday and warned its European sales might be down on a year ago in the final two months of this year.

"We're still waiting for the final data, but there might be a small decrease compared to last year in Europe - not in global performance," Chief Executive Patrizio Bertelli said on a conference call.

He was speaking after the maker of luxury leather goods and Miu Miu brand dresses posted an 8.6 percent rise in net profit to 132.64 million euros ($182 million) for the three months ended October 31, as solid performance in the Americas and Japan made up for slowing growth in Europe and Greater China.

Three analysts polled by Reuters had given a median forecast for net profit of 154 million euros. Revenue in the quarter increased 7.1 percent to 848 million euros.

Net profit in the same period last year was up 30 percent on the previous year at 122.2 million euros.

Along with other luxury groups like LVMH Moet Hennessy Louis Vuitton SA (PAR:MC) and Kering SA (PAR:PP), Prada has had to contend this year with a crackdown on conspicuous spending by government officials in China, where the company normally generates almost a quarter of total sales.

Sales growth in Greater China moderated in the third quarter, Prada said, partly because its flagship stores in Hong Kong and Macau were undergoing renovation work, but Bertelli said the group had still seen good demand from Chinese shoppers abroad.

"The Chinese consumers tend to be strong travellers and they shop a bit everywhere," Bertelli said. "We see a lot of Chinese shoppers in other places like New York, for example."

Prada said the strength of the euro against other currencies, in particular the Japanese yen and U.S. dollar, had weighed on its reported growth. The company also said it had been hit by high taxes in Italy.

"Net income was slightly impacted by exchange rates and a higher tax rate due to the ongoing discussions with Italian authorities on controlled foreign company legislation," chief financial officer Donatello Galli said on the conference call.

Later on Friday, Prada Holding, which controls Prada, released a statement saying it would "repatriate" assets held in the Netherlands and Luxembourg, a move which Bertelli said in the statement was "coherent with our desire to invest in Italy". The process was not related to Prada, the holding company said.

Bertelli also said the company was going to do more to promote its Miu Miu ready-to-wear label, named after chairwoman Miuccia Prada. The group's reliance on its flagship brand has been a concern for analysts.

"We are going to invest more in communications and marketing for the Miu Miu brand," Bertelli said. "We are confident that the results will show next year."

Sales of the Prada brand rose 10 percent in the third quarter, but Miu Miu lagged with a 2 percent sales decline.

"The development of Miu Miu is an important plank to extend growth dynamic into the future," said Exane BNP Paribas analyst Luca Solca after the results were announced.

Shares in Prada closed 0.2 percent higher ahead of the results, while the Hang Seng Index (.HSI) was down 0.3 percent.

(Reporting by Donny Kwok and Lee Chyen Yee in Hong Kong and Isla Binnie in Milan; Editing by Andrew Roche)

Hilton HHonors™ Card

Earn 40,000 Hilton HHonors™ Bonus Points. Apply for Your Card Today.

Heartburn Facts

Read About Heartburn Facts From TUMS. Check Out Heartburn History, Who Gets Heartburn and More.

How Older Men Tighten Their Skin

Men, reduce the look of wrinkles, sagging skin and fine lines with this affordable and effective skin tightening treatment without leaving your home.

Banks Are Worried Homeowners Will Do This.

Homeowners are surprised and furious. If you owe less than $625,000 on your home, you better read this.

Starwood Credit Card

Earn 25,000 Bonus Starpoints®! Use toward Award Nights or Flights.

VA Mortgage Rates In 2016

VA Rates as Low as 2.75% (3.028% APR) 15 Year Fixed. Exclusive For Veteran & Military Takes 1 Min!

How To Make Sagging Skin Look Tight and Lifted

[Watch] The easy and effective way consumers across the country are improving the look of their wrinkled and sagging skin without cosmetic procedures.

IRS Announces E-File Opens on Jan 19th

You can file your simple Federal & State taxes for $0 at TurboTax with zero hidden costs. You'll get your max refund, guaranteed & taxes done right!

Personal Loan Rates as low as 5.99% APR

$25,000 for $742/mo. 3 yr repayment, $0 down payment. No obligation quotes. Get up to 5 offers in minutes. Quotes are free! Start loan request now.

Read This Before You Buy Medigap Plan F

Plan F is the most popular Medicare Supplement plan, but there's another Medigap option you should consider.

9 Cards for People Who Have Great Credit

What card offers up to 5% cash back? And which one offers 24/7 concierge service? See the best credit cards of 2016. Apply online, quickly & easily.

Is Your Website Mobile Ready?

Don't get left behind when it comes to going mobile. Process and fulfill orders, add products, instantly accept payment and more on the go.

Join Disney Movie Club Today

Get 4 Disney Movies For $1 With Membership. See Details. Plus, Free Shipping On Your Initial Order!

Insane Navy Seal Flashlight, should it be banned?

The Military has recently released technology that is now available to the public. Get yours before they run out - Limited Supply!