Prada has it tough but little sister Miu Miu is star attraction

Mediocre summed up Prada’s half-term report Friday. OK, sister brand Miu Miu shone and there were overall strong performances in Europe, the Americas and The Middle East as the signature brand’s shift to retail from wholesale gains momentum. But that’s where the excitement ended.

A key line in Prada chief executive Patrizio Bertelli accompanying statement summed up the mood: “Sales in the first half of 2015 reflect an economic and exchange rate landscape that remains rather volatile with the continuing weakness of important markets like Hong Kong and Macau and the uncertainty looming in other Asian markets.” Enough said.

The Italian fashion house said its net revenues for the six months ended July rose 4% on year to €1.82bn ($1.99bn), failing to meet analysts’ expectation of €1.87bn. Hong Kong-listed Prada said retail sales jumped 8% to €1.55bn, boosted by favourable exchange rates, offsetting a 14% decline in its slowly diminishing wholesale channel.

The Americas and Middle East markets grew at 15% each, with the latter described as “significant”. Europe continued its growth with revenues up 12%, or up 11% currency neutral, “thanks to a steady flow of tourists together with a recovery in consumption by domestic customers”. Japan sales also grew at 12% at current exchange rates, with double digit rates achieved throughout Q2, it noted.

However, Asia Pacific, which accounts for 40% of its overall business, saw sales continue to show “negative trend”, with Hong Kong and Macau the main drivers of sales in that region. Interestingly, there were no numbers here to support the downturn, although it has since emerged in local media that the company is cutting its regular prices there.

Meanwhile, Miu Miu brand continues to grow with revenues up 19% and by 6% currency neutral, showing an acceleration in Q2. Church’s has also achieved sales growth of 19% with the volumes trend also remaining largely positive. Finally, Car Shoe performed broadly in line with prior year.

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