The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
MILAN, Italy — Prada SpA fell as much as 6 percent to the lowest level in more than three years after the luxury retailer reported first-quarter profit that trailed analysts' estimates as it struggled to reverse slumping sales to Chinese shoppers.
Prada shares dropped 5.8 percent to HK$37.45 as of 10:12 a.m. in Hong Kong trading, the lowest intraday level since February 2012. The benchmark Hang Seng Index fell 0.8 percent.
Net income in the three months through April plunged 44 percent to 58.7 million euros ($65.7 million), Milan-based Prada said Friday in a statement. That’s almost half of the average estimate of 85.2 million euros from eight estimates compiled by Bloomberg.
Hong Kong and Macau “will remain challenged for at least six months,” Nomura Holdings Inc. analysts led by Christopher Walker wrote on June 14, adding sales trends remains difficult and maintaining a “reduce” rating on the company.
ADVERTISEMENT
The maker of $695 clogs and $860 wallets 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.
Asia-Pacific markets, especially Hong Kong and Macau, haven’t shown any clear signs of recovery compared with the final months of 2014, Prada said Friday.
Prada said it’s taking action that will involve “an extensive plan to overhaul the entire value chain” and that the first-quarter performance shouldn’t be extrapolated over the full year. The company’s plan includes opening less than 30 stores net of closures in 2015 and curbing discretionary expenses, Prada said.
This week’s round-up of global markets fashion business news also features Latin American mall giants, Nigerian craft entrepreneurs and the mixed picture of China’s luxury market.
Resourceful leaders are turning to creative contingency plans in the face of a national energy crisis, crumbling infrastructure, economic stagnation and social unrest.
This week’s round-up of global markets fashion business news also features the China Duty Free Group, Uniqlo’s Japanese owner and a pan-African e-commerce platform in Côte d’Ivoire.
Affluent members of the Indian diaspora are underserved by fashion retailers, but dedicated e-commerce sites are not a silver bullet for Indian designers aiming to reach them.