MILAN — Strong sales growth in some Asian markets and the Americas wasn’t enough to offset currency headwinds and a negative economic environment in Europe, which tempered Prada Group’s sales growth in the first half of the year.
The Hong Kong-listed company said Wednesday that consolidated net revenues in the six months ended July 31 rose 1 percent versus the same period a year earlier to 1.75 billion euros, or $2.4 billion. At constant exchange rates, the growth in revenues was 4 percent.
Figures are converted at average exchange rates for the periods to which they refer.
In a note released after the results, Citi analysts calculated that Prada, which didn’t publish separate second-quarter figures, saw sales in the three months ended July increase by about 5 percent, in constant currencies, on the year-earlier period, to 927 million euros, or $1.26 billion.
The performance was in line with its and consensus figures, Citi said.
Prada said turnover in the Asia-Pacific region in the first half was up 2 percent in the period at constant exchange rates, but results were mixed on a country-by-country basis. In South Korea, Hong Kong and Singapore, performance was weak, while China, which accelerated in the second quarter, notched up 12 percent growth in the first half, Prada said.
“Other markets [in Asia] managed steady rates of growth,” the company added, with revenues in Japan jumping 19 percent at constant exchange rates.
In the Americas, Prada said the positive trend continues, with sales up 14 percent at constant exchange rates, sustained by both strong domestic consumption and tourist spending.
In Europe, turnover was down 1 percent — at both constant and current exchange rates — as the market was “penalized primarily by a fall in the volume of tourism and by the negative general economic environment, which has hit domestic consumption,” it said.
In the Middle East, sales jumped 21 percent at constant exchange rates.
In terms of channels, Prada said that wholesale recovered in the second quarter, growing 2 percent at constant exchange rates to 288 million euros, or $391.7 million.
Meanwhile, “in a market environment characterized by a general fall in consumption,” the retail channel, which represents more than 83 percent of the firm’s total sales, “held up well,” with revenues in the first half up 1 percent to 1.44 billion euros, or $2 billion. At constant exchange rates, revenue growth in the 566 directly operated stores was 5 percent, Prada said.
In terms of brands, the Prada brand saw sales increase 5 percent at constant exchange, and Miu Miu sales grew 7 percent. “Except in Europe, the [Miu Miu] brand continues to achieve high rates of growth in all markets,” Prada said.
Church’s and Car Shoe registered an expansion in sales of 12 percent and 3 percent at constant currencies, respectively.
The fashion house said clothing and footwear performed “extremely well,” registering revenue growth of 18 percent and 23 percent at constant currencies, respectively. Leather goods showed weakness, with sales decreasing in the period by 1 percent at constant currencies following “the fall in the number of tourists whose spending is more oriented towards this product category,” Prada said.
Chief executive officer Patrizio Bertelli said that, against the unfavorable economic backdrop in the first half of the year, the company has continued “to focus our efforts on medium/long-term growth.”
Bertelli added that “in the coming months, our priority commitment shall be towards monitoring market trends and performance without, however, interrupting the implementation of our plans for growth. At the same time, we will implement a rigorous cost-control program with the aim of protecting margins.”
Prada is scheduled to report full first-half results in September and Bertelli said that the company might also update its full-year guidance “in light of the results achieved in the first half of the year and with a clearer view of the outlook for the months ahead.”
In a meeting with investors and press in Milan in early April, Bertelli said guidance for 2014 included 9 percent sales growth, like-for-like growth of at least 3 percent and operating profit margins in line with 2013. Guidance for the 2015-16 period included 11 percent top-line growth, 5 percent like-for-like growth and improved operating profit margins.
In its note, Citi said that Prada’s current guidance “looks potentially ambitious in light of weak sales and earnings development” in the first half of the year.
However, Citi expects the group to be able to deliver a compound aggregate growth rate of 9 percent in sales over the 2013-16 period and said that it expects “best-in-class gross margin to improve further, to just over 75 percent by calendar year 2016 owing to favorable mix.
“In our view, the current share price probably represents an interesting entry point for any long-term investor looking for solid earnings growth, upside potential from Miu Miu and strong balance sheet/potential for capital returns,” Citi said.
“What he has done at Vuitton is really exceptional,” said @gameofthrones’ actress Gwendoline Christie on @mrkimjones’ final show for @louisvuitton. “He has rebooted luxury in terms of making it commercial, viable and contemporary. And most importantly artistic. He has never compromised his artistic vision for the sake of commodity.” (📷: @zefashioninsider)
After seeing a demand for men’s wear from its customers, British contemporary women’s wear label @ariesarise has added a men’s wear component and will launch a unisex collection with @mrporterlive. The 20-piece collection includes jackets, denim, logo T-shirts and more with deconstructed ‘90s vibes. Set to launch on January 18, you can shop the pieces on Aries’ website and on mrporter.com. #wwdfashion
“And so spending so much time with a character who thinks like that, inevitability you try and analyze yourself and go back and think about your own demons and dark chapters that you had in your life,” says @thedanielbruhl of his role in TNT’s “The Alienist.” The show, set in the Gilded Age of New York, also stars Dakota Fanning and Luke Evans. Head to WWD.com to read about how 39-year-old Brühl prepared for the role and why he thinks the show is so relevant to today #wwdeye ( 📷: @Eriktanner)
Now that Celine Dion’s collection has topped $10 million in sales, the pop superstar, fashion icon and newly-minted industry player is eyeing growth in Asia. Read the full report by @tiffanyap, link in bio. #wwdnews #celinedion
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
Among the familiar faces at @off____white’s show was a surprise figure: Japanese artist @takashipom, pictured here on Wednesday morning. Other show-goers included @jerrylorenzo, who spoke about his upcoming project: a @nike collaboration for back to school, with designs inspired by his childhood on the West Coast. Sitting in the front row were Future, Don Crawley, @miguel and more. See the rest of the photos on WWD.com #wwdeye (📷: Stephane Feugere)
According to @laurentsai, former “Terrace House: Aloha State” cast member, she didn’t know she was auditioning for the Japanese version of “Real World.” “I was telling a couple of my friends and someone’s like, ‘That sounds a lot like Terrace House.’ I was like, ’No it can’t be.’” Turns out, it was. But Tsai isn’t just a reality star — she’s an illustrator who has worked with Starbucks Japan and most recently, she’s dipping her toes into the fashion world. Head to WWD.com to read about her time on the show, modeling and her art. #wwdeye (📷: @danieldorsa)
More changes are coming to New York Fashion Week: Beginning with the spring 2019 collection, @alexanderwangny will move his New York show to June from September, adopting a biannual schedule with collections shown in June and December. Additionally, the @cfda is planning for an official summer/winter fashion season taking place as soon as June and December 2018. Read more about the upcoming changes on WWD.com. #wwdnews #wwdfashion (📷: @slovekinpics)