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Sale of Fendi Stake Drops Prada Net

Solid fourth-quarter growth couldn’t keep Prada’s 2002 results from falling under pressure from the sale of its Fendi stake and a change in ordering procedures.

MILAN — Robust fourth-quarter growth wasn’t sufficient to keep Prada Holding NV’s full-year results from falling substantially under pressure from the sale of its stake in Fendi and a 2001 change in ordering procedures that cut into 2002 sales.

Net profit for the year ended Dec. 31 shed 45.6 percent to $29.2 million from a pro-forma 2001 result of $53.4 million, which excludes results of the 25.5 percent stake in Fendi sold to LVMH Moët Hennessy Louis Vuitton in November of 2001. Including the Fendi stake, net income in 2001 was $60.6 million. Dollar figures have been converted from the euro at current exchange rates.

Prada said negative currency impact and its adjusted delivery pattern accounted for a 16 percent drop in full-year EBITDA to $226.8 million from $270 million on a pro-forma basis in 2001.

Sales for the year fell 3 percent to $1.7 billion from $1.75 billion in 2001, excluding Fendi, and 9.2 percent from the reported 2001 figure of $1.87 billion, which included Fendi. The Prada and Miu Miu brands accounted for about 83 percent of revenue, the company said.

In the fourth quarter alone, Prada said its EBITDA “more than doubled” to $77.8 million while sales rose 12.5 percent to $456.8 million.

The company didn’t furnish earnings guidance for the current year, but did commit itself to revenue growth and further geographic expansion.

“Considering the particularly difficult market situation, we are satisfied with our performance in 2002 and we are ready to approach the challenges of 2003 in terms of growing revenue and expanding the group’s geographic presence through the continual development of its brands,” chief executive Patrizio Bertelli said in a release.

Prada attributed the $54 million drop in full-year sales to a change in product-delivery scheduling, which sped up the filling of orders. The company said the change, made in 2001, unnaturally boosted that year’s results. Stripping out those effects, Prada said sales would have risen, but didn’t specify by how much.

Foreign exchange translation subtracted about $51.8 million from full-year sales results, the company said. Currency fluctuation in late 2002 hurt the sales results of European firms with well-developed overseas business as the dollar and other currencies weakened against the euro.

Europe accounted for just more than half of company sales last year: Italy generated 26 percent of 2002 revenue, while the rest of Europe accounted for 25 percent. Another 23 and 26 percent were derived from North America and Asia, respectively.

Prada said about half of its sales derive from its 247 directly operated stores.

As reported, since full-year and, in some cases, fourth-quarter profit figures began arriving from Europe last week, Gucci reported a 1.7 percent increase in net income for the fourth quarter ended Jan. 31 but a 27.4 percent drop for the year. Bulgari notched an 11.6 percent increase in 2002 profits; IT Holding, a 141.8 percent increase, and Tod’s and Marzotto year-over-year decreases of 2.5 and 24.6 percent, respectively.