Prada's profit growth slows, Europe still under pressure

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)

Yahoo Cricket

Most Viewed

  • Sunny Leone does a Zeenat Aman; wears transparent saree!
    Sunny Leone does a Zeenat Aman; wears transparent saree!

    T-series' upcoming film EK PAHELI LEELA has been creating buzz for quite some time now. …

  • Age gracefully, don't cover the lines: Kareena Kapoor
    Age gracefully, don't cover the lines: Kareena Kapoor

    New Delhi, Feb 27 (IANS) Bollywood's fit and fabulous Kareena Kapoor is on her way to turn 35, and she's clear about not attempting to be 22! She feels the key to ageing gracefully lies in letting the "lines" be, especially when it comes to men. I hate it when I look at somebody and know that they have tried to cover the lines," Kareena told IANS in an interview on a recent visit to the capital. Looking svelte in a golden shimmering gown, exuding a rare glow and charm, Kareena shared her …

  • When Sonam Kapoor Crashed Out On The Sets Of Prem Ratan Dhan Payo
    When Sonam Kapoor Crashed Out On The Sets Of Prem Ratan Dhan Payo

    Seems like Actress Sonam Kapoor is having her hectic schedules these days. She is been shooting in Gujarat with actor Salman Khan for their next film of Sooraj Barjatya’s Prem Ratan Dhan Payo. Take a look at the photographs of Sonam Kapoor, she just crashed out, looking so comfortable, she took a quick nap on the sets of Prem Ratan Dhan Payo. Sonam Kapoor has been attending various events and award shows and equally she is managing her shooting of her upcoming movie Prem Ratan Dhan Payo with …

  • Alia Bhatt Finally Reveals Her Relationship With Sidharth Malhotra
    Alia Bhatt Finally Reveals Her Relationship With Sidharth Malhotra

    Sidharth Malhotra and Alia Bhatt are the new and much talked couple in the Bollywood. Recently at the launch of a show actor Sidharth Malhotra caught the photographer and asked him to give his camera. He started taking Alia Bhatt’s picture. On this situation during the music awards event, Alia Bhatt was questioned about the on going relationship with Sidharth as she has been spotted with him at different events and places together. …

  • Ab Tak Chhappan 2 Movie Review
    Ab Tak Chhappan 2 Movie Review

    AB TAK CHAPPAN 2 is an 80s plot with a 90s twist with director Aejaz Gulab trying to give it a current flavor. It doesn't work. Nana Patekar is at his blistering best... …

  • Oops! Sonakshi Sinha Does It Again!
    Oops! Sonakshi Sinha Does It Again!

    Sonakshi Sinha never goes out looking for trouble, because trouble usually finds her. The actress broke her hand again! Sonakshi Sinha took to her Instagram account and posted a picture of her injured hand, wrapped in pink bandage. Last night, on Friday, Varun Dhawan threw a Badlapur success bash and the actress, like a good and supporting friend, made it to the party, even with her broken hand. …

  • What’s Up? Karishma Tanna And Upen Patel Meeting Each Others Family
    What’s Up? Karishma Tanna And Upen Patel Meeting Each Others Family

    Romantic date was not just inside the Bigg Boss 8 house for the romantic couple Karishma Tanna and Upen Patel. As named by Farah Khan, UPMA celebrated Valentine’s Day together with a classy dinner date. Not just this, Karishma also took Upen to her house to meet her mother. From the time they both have got out of Bigg Boss house, the duo are spending time together with their friends and were also spotted at parties and events. …

  • Yahoo Movies Review: Dum Laga Ke Haisha
    Yahoo Movies Review: Dum Laga Ke Haisha

    Dum Laga Ke Haisha continuously makes you smile. This is a film with a big heart and you’ll also love watching this one for the kind of nostalgia it evokes. …

Loading...