What added to Prada’s difficulty in hitting its profit estimates in the Asia Pacific are the street protests in Hong Kong which is its biggest regional market. The sales in this region accounts for 38% of the Italian luxury group’s overall sales.
From August to October, the sales of the luxury group dropped by 6% which is equivalent to 792 million euros or $975 million. Excluding moves in currency, the group’s sales went down by 8% compared to what it recorded last year.
As for the net profit, it fell from 132.6 million euros to only 74 million euros with the earnings before tax and interest that dropped by 44%.
In its Greater China market alone, Prada’s sales declined by 9% because of the pro-democracy protests in Hong Kong that blocked major access to the shopping districts for more than two months. Another factor that weighed in the decline of sales for the group is the slowing gambing activity in Macau.
Prada Chief Financial Officer Donatello Galli doesn’t see any improvements in the short term and didn’t give any outlook for the incoming year. He only said that the group needs to adapt to the concept of market volatility and admitted that Prada lacked volumes as well as new products in different price ranges.
The new product will target the price brackets of 1,000 to 1,200 euros and 2,500 to 2,700 euros.