Apr 2, 2014
Prada posts less than 1% gain in 2013 profit, missing estimates
Apr 2, 2014
HONG KONG- Prada, known for its luxury handbags, reported a less than 1 percent increase in 2013 full-year profit on Wednesday, hurt by a continued weakness in European markets.
Prada, which also sells Miu Miu, Church's and Car Shoe branded goods, recorded a profit of 627.8 million euros ($866.01 million) in the year ended Jan. 31, up 0.3 percent from the previous year. Analysts on average were expecting a profit of 673.58 million euros.
Sales rose 8.8 percent to 3.59 billion euros, matching the preliminary figure the company reported in February. Sales in Europe, which accounted for about a fifth of Prada's business, grew just 5 percent.
Sales in Asia-Pacific, Prada's biggest market, were much stronger, growing 11.4 percent, with sales in Greater China growing at 12.3 percent.
The Hong Kong-listed shares of Prada closed at HK$61.75 on Wednesday, down 10.5 percent so far this year compared with a 3.4 percent dip in the benchmark Hang Seng index.
Weak European economies and a crackdown on corruption in China have hurt luxury goods makers, hitting both their traditional markets and their biggest new market. Many companies have slowed the pace of new store openings and instead focused on renovating existing stores.
Brands have also been searching for ways to cater to wealthy Chinese tourists who make luxury purchases abroad. Some brands are hiring Mandarin-speaking sales staff while others have held special promotions around the Chinese New Year holidays.
Among its European peers, Prada is expected to have the highest revenue and profit growth in the next 12 months, up 11.5 percent and 14.8 percent, respectively, according to Thomson Reuters SmartEstimates, which gives estimates from top-rated analysts a higher weighting.
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