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Prada's results confirm deterioration of sales revenue

Mar 11, 2015 Italy
Prada's results confirm deterioration of sales revenue
The preliminary sales reported by the Prada Group for the financial year ended on the 31st of January 2015 amount to 3 552 million euros, slightly below the previous financial year (-1%)
Prada’s wholesale channel ended the financial year with sales of 532 million euros, a decrease of 4% (-5% at constant exchange rates) mainly driven by the European and American markets where the rationalization program continued. In contrast, strong sales growth characterized the network of franchise stores in the Asia Pacific region.

By the end of the financial year, the group’s retail network, comprised by 594 Directly Operated Stores (DOS), registered sales totaling 2 981 million euros, broadly in line with financial year 2013 (current and constant exchange rates).

There were clear differences between the various geographical areas: 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.

In Europe sales revenue decreased by 1% compared to the previous financial year reflecting a fall in tourism’ spending and a weak domestic demand. However, the trend did improve in the fourth quarter in Europe and in the Americas market. For the twelve months period the growth rate totaled 8% at current exchange rates (+7% at constant exchange rates).

The situation was more difficult for Prada in Asia Pacific and sales for financial year 2014 were 5% down (-7% at constant exchange rates). The fall in sales in this area was particularly felt in Hong Kong and Macau, where market conditions deteriorated significantly during the second half of the year.

The Japanese market continued with the robust growth even in the fourth quarter. Sales for financial year 2014 as a whole, increased by 8% at current exchange rates (+13% at constant exchange rates).

Middle East performance was affected by a slump in the number of Russian tourists, but still managed to register overall sales growth in the area amounting to 10% at current exchange rates (+9% at constant exchange rates).

The Prada brand, now accounting for 83% of consolidated sales, recorded in 2014 a 1.7% decrease at current exchange rates (-1.6% at constant exchange rates), with performance varying from one geographical area to another.

Miu Miu recorded a 4% increase in sales at current exchange rates in financial year 2014 (+4.4% at constant exchange rates), with growth registered across all markets, except for Europe.

Sales increases were also achieved by both Church’s, +14.8% at current exchange rates (+12.2% at constant exchange rates), and Car Shoe, +12.7% at current exchange rates (+11.5% at constant exchange rates).

Patrizio Bertelli, Chief Executive Officer of Prada Spa, commented: “Throughout financial year 2014, we operated under a geopolitical and monetary environment which 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. 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”.

Full results regarding the performance in 2014 will be published following the approval by the Board of Directors at the meeting scheduled for the 26th of March.

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