The Italian-headquartered, Hong Kong-listed luxury brand says its Asia Pacific sales slumped 18 per cent on a constant currency basis in the first half of this year.
“The negative economic backdrop continued to impact performance in both Hong Kong and Macau, but signs of improvement have been visible since July across Greater China,” the company noted in its results.
And after a period of consistent growth since 2010, sales in Japan fell 9 per cent, mainly due to lower tourist flows from China caused by a less favourable exchange rate.
CEO Patrizio Bertelli says the company will now make China, Hong Kong and Singapore its priorities in roll out its new eCommerce platform, which is expected to be global within to years.
“At the same time there will be a constant enhancement of the online shopping experience,” he said. “Our eCommerce offer will also leverage new partnerships with international leaders in the sector.”
Globally, Prada achieved net revenues of €1.6 billion, down 13 per cent on a constant currency basis. The decline was largely in the retail channel while Prada’s wholesale business remained stable thanks to an initial positive contribution from recent partnerships with international e-tailers and its licensing division, where good progress from royalties driven by the success of the new fragrances and eyewear.
Net profit margin was down from 24 per cent of revenues in the first half of last year to 21 per cent. Net income amounted to €142 million, representing 9 per cent of consolidated revenues (10 per cent in 2015).
Bertelli is upbeat about the remainder of 2016.
“With the implementation of the first phase of rationalisation of various management and operating processes and with the launch of a series of new initiatives that will allow the group to respond quickly to the requirements of a rapidly evolving market, I see 2016 as a turning point.”
He said the company’s retail network is subject to rigorous review including closure of non- strategic locations and selective openings in high potential markets.
“Part of this process will also include the launch of new concepts such as the recent restyling of the Prada stores at Plaza 66 in Shanghai and GUM in Moscow, redesigned to offer a new and exclusive shopping experience for increasingly demanding clients.”