Prada expects sales to slow as demand in Europe eases

PUBLISHED : Thursday, 03 April, 2014, 5:16am
UPDATED : Thursday, 03 April, 2014, 6:55am

Italian luxury handbag maker Prada has forecast slowing sales growth this year amid a maturing Chinese market and soft demand in Europe.

Same-store sales would rise at a "low single-digit" pace during this financial year to January, Milan-based Prada said yesterday, lower than last year's 7 per cent increase.

"All in all, a bit underwhelming," said Rahul Sharma, the managing director of Neev Capital in London. "I do sense some waning in the newness, coupled with a significant increase in Prada's price points."

Prada's outlook is in keeping with the broader luxury goods industry, where growth is being pegged back by softening demand in Europe and Asia, and the strength of the euro.

The industry expanded 2 per cent to €217 billion (HK$2.32 trillion) last year, the weakest pace in four years, according to Bain & Co.

Prada said the long-term outlook for luxury goods remained strong "despite possible short-term volatility", although the strength of the euro "does not help exports".

The luxury goods market was likely to grow 3 per cent to 5 per cent a year to as much as €255 billion until 2016, it said.

Prada said it planned to open about 120 new stores under its namesake brand until 2016, with 50 of them for men only.

It said it saw "strong growth" for the category in the medium term.

Meanwhile, its Miu Miu brand would open about 70 stores in the same period.

Net income in the past financial year rose 0.3 per cent to €627.8 million, short of the €656.3 million average estimate of 28 analysts surveyed. Revenue climbed 8.8 per cent to €3.59 billion, slowing in the fourth quarter, Prada reported in February.