Prada powers on with healthy profit
The Asia-Pacific market continues to be its pillar, contributing 35 per cent to total revenue
Italian fashion house Prada achieved robust growth of nearly 50 per cent in net profit for the nine months to October on strong demand from Asia.
The luxury leather goods maker said net profit from February to October rose to €409 million (HK$4.15 billion) from €273 million a year ago, beating analysts' estimates. Sales revenue increased 35 per cent to €2.34 billion for the period, with the Asia-Pacific market contributing the most to the performance, the company said last night.
"Prada has outperformed (the market) for the three quarters. We expect it to perform better than peers due to its under-penetration, high advertising and promotion spend, retail expansion and more fashion positioning," said Tanuj Shori, an analyst at Nomura Hong Kong.
"We do anticipate some momentum slowdown in North America, while Europe and Italy should do well on the back of tourist flows," he said.
The Milan-based company, which owns Miu Miu, Church's and Car Shoe, said revenue for the three months to October was €792 million, up 33 per cent.
The Asia-Pacific continued to be the pillar of the company's business, contributing €815 million, or 35 per cent, to the total revenue for the nine months.
China registered an increase of 43 per cent in sales and contributed €359 million.
European sales also surged 23 per cent, while its home market, Italy, and the Americas posted 17 and 14 per cent growth respectively. Japan rose 9.3 per cent.
The Prada brand generated about 80 per cent of the sales while Miu Miu added 16 per cent.
The strong growth by Prada is expected to enhance investors' confidence in luxury goods sales, despite weakening economies.
Britain's largest luxury-goods company, Burberry, issued a profit warning in September, saying same-store revenue stalled over the previous 10 months.
By contrast, Prada said its same-store sales for the first three quarters of the financial year rose 18 per cent, compared with 23 per cent previously but was still strong.
The company opened 40 new shops during the reporting period, bringing the number of its directly operated stores to 428.
"The group remains confident that the strategies and the actions in place will continue to bring positive results even in the present still challenging global economic environment," said the company yesterday.
Prada shares rose 2.38 per cent to HK$64.5 before the results were announced yesterday.