Prada: Half-year profit shrinks strongly

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Prada: Halbjahresgewinn schrumpft kräftig

Prada: Half-year profit shrinks strongly

The Italian luxury fashion house Prada SpA is still in the descent: In the first half of 2017/18 it missed the sales and earnings of the previous year level clearly. Debt was the result of shrinking revenues in almost all market regions. Demand in Asia remained stable only in Asia.

In the first half of the year, which ended at the end of July, sales, including license revenue, totaled € 1.47 billion, a decrease of 5.5 percent compared to the same period of the previous year. Thanks to higher revenues in China (+4.5 percent) and favorable exchange rate fluctuations, the Asia business, which is not included in Prada Japan, was stable: overall sales there were slightly higher than the previous year (463.0 million euros) +0.4 percent).

In contrast, the rest of the markets were down. In Europe (553.6 million euros), revenues fell by 7.7 percent, in the Americas (210.4 million euros) by 3.7 percent, in Japan (164.4 million euros) by 14.2 percent and in the near East (49.2 million euros) by 11.7 percent. While clothing sold better worldwide (EUR 273.8 million, +4.3 percent), the demand for leather goods (EUR 826.9 million, -7.4 percent) and footwear (EUR 310.3 million, -9.7 Percent).

The company sees “good progress” in its restructuring efforts

Higher expenditures on advertising and digital communications contributed to a slower decline in earnings: operating profit (EBIT) shrank by 21.9 per cent to 166.8 million euros, while the half-year net profit attributable to shareholders was 18.4 per cent to 115.7 million euros.

In view of the fact that the figures have been faltering for some time, the company has decided to undertake far-reaching internal conversion measures aimed at improving the cost structure throughout the Group. “The complex task of restructuring all operational processes in order to provide the Group with the tools to compete in an increasingly difficult market is making good progress,” the company said. But there is still a lot to be done.

“The Group is convinced that its action plan is the best way to return to steady growth in revenues and margins,” the company said. However, the management also acknowledged that the positive effects could be a little longer than had been hoped.

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