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Asia-Pacific sales put Prada in fine shape

Italian luxury retaileris confident about the near term after reporting a strong increase in profits despite wider economic malaise

PUBLISHED : Tuesday, 25 September, 2012, 12:00am
UPDATED : Tuesday, 25 September, 2012, 4:30am

Italian luxury fashion house Prada, which posted strong first-half earnings growth of nearly 60 per cent, is confident in the market in the near term despite the sluggish global economy.

Prada said in a filing yesterday its net income for the six months to July jumped 59.5 per cent from a year earlier to €286.4 million (HK$2.86 billion). Net revenue was €1.55 billion, up 36 per cent.

The robust sales growth was largely driven by surging demand from Asia-Pacific consumers, who spent €532 million on the company's leather goods and accessories, an increase of 35 per cent from a year earlier.

Its markets in Europe, the United States and Japan recorded 23 per cent, 15 per cent and 9.5 per cent sales growth, respectively, for the period.

The Milan-based company reported same-store sales jumped 19 per cent in the period.

The luxury goods retailer, which also operates Miu Miu, Church's and Car Shoe, has outperformed other top-brand operators that have announced slower growth amid the weak global economic environment.

Britain's Burberry said two weeks ago its same-store revenue had stalled for the last 10 weeks as high-end shoppers cut their spending on expensive apparel and accessories.

Before that, US high-end jewellery retailer Tiffany & Co cut its the full-year profit forecast, and Canadian diamond miner and jewellery retailer Harry Winston also said demand from consumers had slowed.

"Considering the current economic situation, [Prada's] 60 per cent growth in net profit is excellent," said Aaron Fischer, head of consumer and gaming research at CLSA.

"The market is looking more difficult going into the second half, but we believe Prada will continue to take market share and reinforce their leading position in the luxury goods industry."

Prada, which was listed in Hong Kong on June 24 last year, has risen nearly 71 per cent this year, compared with an increase of 12 per cent in the benchmark Hang Seng Index. The firm's share price rose 1.2 per cent to HK$59.95 yesterday before the interim results were announced.

At the end of July, the company had 414 directly run shops globally, including 263 Prada shops, 102 Miu Miu outlets and 43 shops under the brand Church's. It also has 25 franchised shops. About 30 per cent of its shops are in Europe and another 30 per cent in the Asia-Pacific.

"Market conditions are expected to remain very challenging for the short term, with some general volatility," Prada deputy chairman Carlo Mazzi said. But, he said the company was confident about the near future given that the management had shown it could meet growth expectations.

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