Prada Asia fortunes wane
In this article (5)
Prada Asia is the Italian luxury label’s achilles heel with the company reporting a 16 per cent decrease in sales in the region in the year to January 31.
“The economic situation of the Chinese market remains negative although there was some improvement in the final quarter,” Prada said in its earnings statement.
“Consequently, in the 2015 financial year, the entire Asia Pacific area (excluding Japan) recorded a 4 per cent revenue decrease at current exchange rates and a 16 per cent decrease at constant exchange rates.”
Japan proved a better market, for the label: for the fifth consecutive year, sales rose, this time by 11 per cent at current exchange rates, or 4 per cent at constant rates.
Global sales changed little – for the second year in a row – largely due to the strengthening US dollar. Total revenue was 3.552 billion euros (US$3.96 billion) in 2015. Sales in the US fell 9 per cent excluding currency fluctuations.
“Throughout 2015, we had to deal with an economic environment characterised by extreme volatility in currency markets, as well as by the deteriorating geopolitical situation in many world regions,” commented said CEO Patrizio Bertelli, in a clear reference to the falling demand for luxury goods in China and the Paris terrorist attacks.
“These two factors have made prices fluctuate wildly and diverted tourist traffic in sudden and unpredictable ways. Our retail network – now truly global thanks to investment in recent years – enables us to keep developing a direct relationship with our ever more demanding customer all over the world. In the coming months, the group will be focusing its energies on the development of new commercial and marketing initiatives to sustain organic growth, also by means of an extensive digital project to strengthen dialogue with our customers. These actions, taken against the background of rigorous and disciplined cost control, will enable us to consolidate our market position with satisfactory margins and returns on investment.”
Prada is listed in Hong Kong.
Questions & Answers
Q.Which specific region experienced the largest decline in sales for Prada?
Which specific region experienced the largest decline in sales for Prada?
Prada Asia experienced a 16 per cent decrease in sales for the year to January 31, significantly impacting the company's regional performance. This was measured at constant exchange rates.
Q.What were the main factors identified by the CEO for the challenging economic environment?
What were the main factors identified by the CEO for the challenging economic environment?
CEO Patrizio Bertelli cited extreme volatility in currency markets and a deteriorating geopolitical situation as key challenges. He referenced falling demand in China and the Paris terrorist attacks as examples.
Q.How did Japan's sales performance compare to other Asian markets for Prada?
How did Japan's sales performance compare to other Asian markets for Prada?
Japan proved a better market, with sales rising by 11 per cent at current exchange rates and 4 per cent at constant rates. This is the fifth consecutive year of sales growth there.
Q.What strategic initiatives will Prada focus on to sustain growth in the coming months?
What strategic initiatives will Prada focus on to sustain growth in the coming months?
The group will focus on developing new commercial and marketing initiatives, including an extensive digital project to strengthen customer dialogue. These actions will be supported by rigorous cost control.
Reader pulse
Prada's Asia decline is a sign of:
23,437 votes so far