MILAN — Last year was one of chiaroscuro for Prada Group.
Growing sales in the Americas, Japan and the Middle East helped offset a decrease in the Far East, hurt by a slowdown in Macau and Hong Kong, and in Europe, dented by a fall in tourist spending and ongoing lackluster local demand. The result was a 1 percent drop in preliminary revenues to 3.55 billion euros, or $4.65 billion at average exchange.
In the 12 months ended Jan. 31, the Prada brand posted a 1.7 percent decrease in revenues and accounted for 83 percent of total group sales, seeing gains in the men’s category. Miu Miu recorded a 4 percent increase, showing a strong performance in all markets, including the Far East, except Europe.
“Throughout financial year 2014, we operated under a geopolitical and monetary environment that was more uncertain and complex than could have been envisaged. This situation has temporarily held up the group’s path of growth, but it will not affect our medium-long-term growth objectives,” said chief executive officer Patrizio Bertelli. “We shall continue to pursue said objectives, adapting our strategy and organizational structure to the constantly evolving global environment. Thanks to operational decisions taken in recent years, we now have a balanced, global retail presence which enables us to maintain and develop direct relations with our customer base and makes a daily contribution to broadening the image of our brands around the world. The group’s medium-term plan shall continue with the focused industrial, marketing and retail investments needed to guarantee solid future growth. The closest attention is always paid to costs, in order to safeguard profit margins and yield satisfactory returns on investments.”
Sales of the group’s Church’s and Car Shoe brands were up 14.8 and 12.7 percent, respectively.
Prada’s wholesale channel logged in a 4 percent decrease to 532 million euros, or $697 million, affected by the group’s ongoing strategy to expand its retail network and rationalize its wholesale division. “The decrease is essentially due to the European and American markets where we continued our rationalization program. In contrast, there was strong sales growth for the network of franchise stores in the Asia-Pacific region (DFS) which have benefited from an increasing flow of Chinese consumers,” the company said.
At the end of January, the group’s retail network totaled 594 directly operated stores and logged in revenues of 2.98 billion euros, or $3.9 billion, broadly in line with the previous year. The group identified “clear differences” depending on the geographic markets. The growth recorded in Japan, the Americas and the Middle East was offset by a fall in sales in the Far East, where market conditions gradually deteriorated in the second half of the year.
At group level, sales in Europe decreased 1 percent compared with the previous financial year, but the market improved in the fourth quarter, showing an uptick in revenues.
The Americas also continued to grow in the fourth quarter, lifted by “buoyant domestic consumption.” In the 12 months, the region recorded an 8 percent increase.
Revenues in Asia-Pacific were down 5 percent in the year, affected by Hong Kong and Macau, “where market conditions deteriorated significantly during the second half of the year. The different timing of the Chinese New Year also affected performance for the month of January throughout the Greater China area,” Prada said.
The Japanese market also continued to grow in the fourth quarter and sales for the year increased 8 percent. At constant exchange, they would have climbed 13 percent.
The Middle East posted a 10 percent gain in revenues, although the company saw a “slump in the number of Russian tourists” in the region.
Prada, which is publicly listed on the Hong Kong Stock Exchange, uploaded its 2014 preliminary figures to its Web site on Sunday. Full financial 2014 results will be released following the board’s approval at a meeting provisionally scheduled for March 26.