Hong Kong a drag on Prada
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Luxury fashion group Prada says the Asia Pacific market continued to decline during the first nine months of the new financial year.
And Hong Kong and Macau have taken the blame – again.
During the last three quarters, sales in the region fell 4.9 per cent at current exchange rates.
“This is due to reductions in both local consumption and tourist flows within the region, with Hong Kong and Macau particularly affected,” Prada said in its results statement.
But Japan helped ease the pain. Prada sets Japanese sales apart from Asia Pacific sales, reporting a 10.4 per cent increase in sales at current exchange rates and 4.6 per cent at constant exchange rates, driven largely by the rising number of Chinese tourists – many of whom in previous years would have visited Hong Kong to shop for luxury goods.
In Europe, too, the influx of Asian tourists boosted sales, which rose 8.6 per cent at current exchange rates and 7.6 per cent at constant exchange rates. The Italian market continued to stand out among the various European countries and recorded growth rates well above the average for the area.
On the American market sales increased at current exchange rate by 8.5 per cent, but showed a negative underlying trend, down 7.6 per cent at constant exchange rates.
“The significant strengthening of the US dollar over the period had an adverse impact on tourism, mainly from China and South America, but, at the same time, it encouraged a shift in American consumer spending towards Europe,” Prada said.
“This is due to reductions in both local consumption and tourist flows within the region, with Hong Kong and Macau particularly affected,”
By brand, Prada recorded a 2.1 per cent global sales increase which was entirely attributable to the exchange rate effect. Miu Miu has grown with revenues up at both current exchange rates (+11.8 per cent) and constant exchange rates (+1.9 per cent). Church’s has also achieved sales growth (+17.6 per cent), a positive trend also on a like-for-like base.
The licensing business (eyewear and fragrances) performed very well, with royalties for the nine months to October 31, totalling Euro 33.5 million, a 16.2 per cent increase, in large part thanks to the launch of the first Miu Miu fragrance.
Prada Group’s consolidated revenue for the nine months was Euro 2.583 billion. This represents a 1.2 per cent increase at current exchange rates on the corresponding period in 2014, entirely thanks to directly operated store sales. Wholesale revenues decreased as the group continues to reduce its presence in that channel.
Net profit was Euro 235.1 million or 9.1 per cent of net revenue.
Questions & Answers
Q.Which specific markets were singled out as contributing to the decline in Asia Pacific sales?
Which specific markets were singled out as contributing to the decline in Asia Pacific sales?
Hong Kong and Macau were particularly affected, due to reductions in both local consumption and tourist flows within the region. This contributed to the overall decline in Asia Pacific sales.
Q.Which brand within the Prada Group showed the strongest growth at constant exchange rates?
Which brand within the Prada Group showed the strongest growth at constant exchange rates?
Miu Miu demonstrated growth of 1.9 per cent at constant exchange rates. Church’s also achieved sales growth, with the article noting a positive trend on a like-for-like base.
Q.How did the strengthening US dollar impact Prada's American market performance?
How did the strengthening US dollar impact Prada's American market performance?
The significant strengthening of the US dollar had an adverse impact on tourism, mainly from China and South America. However, it also encouraged American consumer spending to shift towards Europe.
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