MILAN — Prada SpA on Tuesday added its name to the list of luxury firms blighted by the economic downturn, reporting a 22 percent drop in earnings in fiscal 2008.
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For the 12 months through Jan. 31, net profits at the Italian fashion group, which owns the Prada, Miu Miu, Car Shoe and Church’s brands, fell to 98.8 million euros, or $144.2 million, from 126.8 million euros, or $173.8 million, in fiscal 2007.
Dollar figures were converted at average exchange rates for the periods to which they refer.
Group revenues dipped 0.7 percent to 1.65 billion euros, or $2.4 billion, although at constant exchange and factoring in the same level of consolidation of the Church’s brand, which was acquired in June 2007, these gained 0.2 percent.
“Above and beyond the uncertainty of the moment, I am convinced that it is an entrepreneur’s task to meet difficult times head-on with a medium-long-term vision,” chief executive officer Patrizio Bertelli stated.
A company spokesman added Prada’s oft-postponed initial public offering was not a management priority for now due to the unfavorable market conditions.
Earnings before interest, taxes, depreciation and amortization fell 10.7 percent to 282.2 million euros, or $412 million, which the company attributed primarily to exchange rate fluctuations and efforts to strengthen the retail channel.
Net financial indebtedness increased 6 percent to 537.4 million euros, or $784.6 million.
Prada said cash flow from operations and good working capital management made it possible to maintain a balanced net financial position, adding careful handling of the warehouse had helped reduce product inventory.
The group did not break down revenues by brand or geography.
Last year, Prada increased net investments by 68.8 percent to 158.7 million euros, or $231.7 million, to open 34 new stores, predominantly in Asia and Europe, and strengthen industrial facilities. At the close of 2008, Prada’s directly operated store network totaled 238 boutiques worldwide.
“In 2008 the Prada Group implemented the most aggressive investment plan it has ever undertaken,” Bertelli said. “When the crisis is over, the Prada Group will be able to benefit from an industrial and distribution structure that is even stronger than before in order to make the most of the opportunities that will arise during the new development cycle.”
By channel, sales via directly operated stores gained 5.6 percent at constant exchange to 871.3 million euros, or $1.27 billion, and were 1.5 percent up on a like-for-like basis. Wholesale revenues fell 4.7 percent to 737.5 million euros, or $1.08 billion, which Prada attributed to the implementation of a selective distribution policy and weaker demand in the U.S. market.
Revenue from royalties decreased 15 percent to 39.5 million euros, or $57.7 million, due to the consolidation of the sales campaign for the first Prada phone by LG, the company said.