Luxury fashion label Prada reported a dip in first-half profits as shoppers were reluctant spend in Europe, Japan and the United States, despite strong sales in China.
The Italy-based, Hong Kong-listed luxury house said net profit for the last six months came in at 115.7 million euros ($139 million), down from 141.9 million euros a year earlier, on lower volumes and higher costs related to the restructuring, particularly in the digital business.
Total revenue over the period was down 5.5 % at current exchange rates, due to weak sales in Europe, said Italy’s largest fashion group. That followed a 10 per cent decline in revenue in 2016.
“The stronger euro at the end of the period adversely affected tourist spending,” said Prada, adding that the US was also a tough market.
However, China was a region that recorded growth for Prada, with sales up 5.2% at constant exchange rate and growth also seen across Macau and Hong Kong.
In neighbouring Japan, market apathy remained unchanged, with sales declining by 14.2% at current and constant exchange rates, again “highlighting weak consumption by both domestic customers and tourists,” said Prada.
Meanwhile, Asia Pacific “bucked the trend” with revenues in line with last year, up 0.4%, it said.
CEO Patricia Bertelli confirmed that the firm’s turnaround could take longer than expected after earlier declaring 2017 to be the year the Milanese group stepped into green territory. But, investments in stores and online appear to have dented profits.
This year alone, Prada group – which also boasts Miu Miu, Church’s and Car Shoe brands – opened six stores and closed 13, as well as renovating 76 boutiques.
The group said that it expected the number of directly-owned stores worldwide – currently 613 – to remain stable this year and next.