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Prada sales growth slows in H1, full-year outlook target now “challenging”

Italian luxury fashion house Prada reported H1 sales growth of just 1%, its slowest six monthly performance in three years, citing “a more difficult political and macroeconomic environment than expected”. More specifically, it acknowledged there were lower tourist numbers in key locations to buy its high-margin leather-goods. Chief executive Patrizio Bertelli said Prada could now revise its full-year guidance following the lacklustre first-half with a target of high-single digit revenue increases for the full year now looking “challenging”, he admitted.

Prada’s global sales map for the half also looked very uneven with Europe the hardest hit as currency changes and the strong euro forced sales down 1%. However, the Middle East was the fastest-growing area for the company, with sales up 16%. Asia-Pacific fell 2% as weaker-than-expected trading in South Korea, Hong Kong and Singapore was offset by a 12% rise in China at constant exchange rates, and Japan rose 10%. The Americas on the other hand reaped an impressive 8% gain, or up 14% currency neutral.

Group sales for the six months ending July at the Hong Kong-listed group inched up that 1% to €1.75bn. That compares to a 12% gain in the previous year and 36% jump in the year before that.

In June, Prada announced Q1 net profits dropped almost 24% on-year and revenues were down 0.6%.

Accessories sales in H1 were down 5% on-year, and down 1% at constant rates, but sales at the company’s wholesale channel were up 1%, signalling a strong recovery in Q2 given the 25% decline in Q1.

Bertelli said, however, the company “continued to focus our efforts on medium/long-term growth: our industrial, marketing and retail investments to sustain the quality of our products and our relationships with clients will continue to bear fruit”.

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