MILAN — Lifted by the strong performance of its stores, gains in all markets and continued growth of its namesake brand, Prada Group posted a 9 percent increase in preliminary revenues in the fiscal year ended Jan. 31.
Sales rose to 3.58 billion euros, or $4.76 billion, compared with 3.29 billion euros, or $4.24 billion, in the previous year. At constant exchange rates, revenues would have climbed 13 percent.
Chief executive officer Patrizio Bertelli said the 2013 financial year “was the fourth consecutive year of strong growth. Against an unfavorable background of exchange-rate volatility and the ongoing negative economic situation in Europe, we have maintained one of the highest rates of growth in the sector and have continued to pursue our objectives of retail growth. RELATED CONTENT: WWD Earnings Tracker >>
He noted the company had launched a program of investment in Italy to improve its production structure and quality.
“The investments made, together with important marketing initiatives in support of the image of our brands, enable us to look forward with confidence to further progress in 2014,” he added.
Sales of the group’s own retail network rose 12 percent to 2.99 billion euros, or $3.97 billion. The Milan-based firm attributed the growth to newly opened stores and to a 7 percent increase in same-store sales. The wholesale channel showed a 7 percent decline as a consequence of the company’s strategy to streamline the network, in Europe in particular.
During the year, the group opened 79 stores, reaching a total of 540 directly operated units at the end of January. The new stores included 330 Prada units, 150 Miu Miu venues, 52 Church’s and eight Car Shoe. Among the most recent openings were four new Prada stores in Brazil; new Prada and Miu Miu venues in Istanbul; a Miu Miu door at Saks Fifth Avenue in Miami; Prada’s first boutique in Kazakhstan, in Almaty, and a new unit in Courchevel, France. A new Prada boutique also opened in Florence in January.
The Asia Pacific region grew 11 percent, and Greater China in particular significantly contributed to the gain with sales of 826 million euros, or $1.09 billion, up 15 percent at constant exchange rates.
In the U.S., sales increased 11 percent, entirely boosted by the group’s retail channel, which jumped 36 percent at constant exchange rates.
Despite the difficult economy in Europe and the recent strengthening of the euro, the area was up 5 percent, lifted once again by Prada’s retail channel.
Japan continued to grow, showing a 24 percent rise at constant exchange rates, although the ongoing weakness of the yen meant that the euro equivalent revenues were broadly in line with 2012, up 1 percent.
Counting 16 directly operated stores in the Middle East, the region generated sales of 90 million euros, or $119.7 million.
The Prada brand saw sales climb 11 percent, or 16 percent at constant exchange rates. Miu Miu was up 1 percent and the company pointed to “encouraging signs from emerging markets (including China) and the Americas.”
Church’s posted a 3 percent gain at constant exchange rates.
Dollar amounts are converted at average exchange for the periods to which they refer.
In a report for Citi Research, Thomas Chauvet, head of European luxury goods research at Citigroup in London, said that while Prada “shares continue to underperform in the luxury sector,” Citi expects “Prada’s revenue/earnings dynamics to outperform most luxury peers over the next three years on retail immaturities/expansion, strong product innovation/merchandising, global tourism and product mix (leather goods), thus gaining further share of the global soft luxury goods market.”
The research also noted that “the market seems to continue to underappreciate Prada Group’s superior earnings growth profile in an overall subdued 2014 luxury sector environment, Prada brand’s superior sales momentum in China, early benefits from the brand repositioning in Japan and the U.S., long-term upside potential from Miu Miu, and strong balance sheet/potential for capital returns.”
Full year-end results will be released on April 2.
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