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MILAN — Leveraging the performance of its retail network, Prada SpA posted a 1.4 percent increase in net profits to 100.2 million euros, or $140.2 million, in the year ended Jan. 31.
The weak economy and soft wholesale sales in markets such as the U.S. contributed to a 5 percent drop in revenues compared to the previous year, totaling 1.56 billion euros, or $2.18 billion.
Patrizio Bertelli, chief executive officer of the Prada Group, said the performance confirms the group’s strategy and should allow it to continue to expand worldwide.
Despite the global economic downturn, Prada has been investing in its directly operated store channel. The store network “has not only allowed for a significant increase in retail sales, but has also strongly contributed to reinforce the group’s brands’ image worldwide,” said the fashion house.
Revenues at directly operated stores grew 14 percent last year, “compensating most of the reduced sales by the wholesale unit to U.S. department stores.” Retail sales accounted for 65 percent of total revenues.
Prada self-financed its development, with investments in 2009 totalling 134.5 million euros, or $188.3 million, mainly directed at the opening of 35 stores in Asia and Europe. Last year, the company opened 16 Prada stores, 15 Miu Miu boutiques, three Church’s and one Car Shoe. As of Jan. 31, directly operated stores totaled 267.
Earnings before interest, taxes, depreciation and amortization rose to 290 million euros, or $406 million, or 18.6 percent of sales, from 282 million euros, or $411.7 million, in the previous fiscal year.
Dollar figures are converted at average exchange rates for the periods to which they refer.
Prada said capital expenditures were covered by “strong consolidated operating cash flow.” The group’s net debt stood at 485 million euros, or $679 million, reduced from 555 million euros, or $810.3 million, the year before.
Prada last summer received some breathing room as its lenders — banks Intesa Sanpaolo, Unicredit, Calyon, Banca Leonardo, Banco Popolare and Centrobanca — agreed to postpone until 2012 the term payment of 450 million euros, or $603.6 million at current exchange, of the group’s debt. As a result, Bertelli and his wife, Miuccia Prada, are not immediately pressured to sell a stake in the firm.
Although Prada has called off plans for an initial public offering four times this decade, the company has not ruled out a listing on the Milan Stock Exchange at some point. “We are closely monitoring market conditions,” said a Prada spokesman.