MILAN, Italy — Prada SpA reported first-quarter profit that trailed analysts’ estimates as the Italian fashion house struggled to reverse a slump in sales in China.
Net income in the three months through April fell to 58.7 million euros ($65.7 million) from 105.3 million euros, Milan- based Prada said Friday in a statement. Analysts predicted 85.2 million euros, based on the average of eight estimates compiled by Bloomberg.
Prada is opening fewer stores, shuttering some wholesale accounts and introducing more bags priced between 1,000 euros and 1,200 euros as it attempts to reignite demand amid a clampdown on corruption and extravagance in China. First-quarter revenue rose 6.5 percent to 828.2 million euros as the weakness of the euro compensated for anemic growth in the Asia-Pacific region, Prada’s most important market.
“In the first few months of 2015, Asia-Pacific markets, especially Hong Kong and Macau, have not shown any clear signs of recovery compared to the final months of 2014,” Prada said Friday. “This ongoing situation continues to severely affect the group’s operating results.”
Prada said it’s taking action that will involve “an extensive plan to overhaul the entire value chain.”
The plan “aims to start again a growth trend as well as to rationalize operational processes to increase efficiency, so as to achieve a return at the levels of profitability enjoyed until the recent past,” the company said.
By Andrew Roberts; editors: Matthew Boyle, Paul Jarvis, Thomas Mulier.