Hong Kong a drag on Prada

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.

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“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.

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.

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