MILAN, Italy — Prada SpA, an Italian maker of $1,150 studded leather slippers, said it remains confident of succeeding in a challenging economic climate as a policy of cutting discounts helped profit beat analyst predictions.
Net income in the 12 months ended Jan. 31 rose 45 percent to 625.7 million euros ($809 million) from 431.9 million euros a year earlier, the Milan-based company said today in a statement. Analysts expected profit of 618 million euros, according to the average of 29 estimates compiled by Bloomberg.
Prada limited markdowns in the final quarter of the fiscal year as same-store sales growth decelerated from the previous three months, mainly because of the later timing of the Chinese New Year in 2013. The fuller-price policy and new stores helped support earnings before interest and tax as a proportion of sales, which widened to 27 percent from 24.6 percent.
“The group remains confident that the strategy which has been coherently deployed in recent years with regard to brand positioning and retail expansion will again be a key success factor for the forthcoming fiscal year, even in a general economic environment that remains challenging,” Prada said.
The earnings were released after the close of trading in Hong Kong, where the company’s stock is listed. Prada shares fell 1.5 percent to HK$77.1 today, giving the owner of brands including Church’s and Car Shoe a market value of HK$197.3 billion ($25.4 billion).
“Prada represents a structural growth story, supported by a strong store opening plan and compelling like-for-like growth, with substantial margin upside potential across both flagship brands, Prada and Miu Miu,” Allegra Perry, an analyst at Cantor Fitzgerald who recommends buying Prada shares, wrote in a report last week. “We see a significant opportunity in Asia where the group is under-penetrated.”
By: Andrew Roberts; Editors: Paul Jarvis, Tom Lavell