Prada expects recovery in 2016 despite negative results in the first half

Prada’s net revenues fell 13 percent at constant exchange rates in the first half of 2016, but the brand remains positive about the future. Prada’s total net revenue for the six months ended July 31 was 1.554 billion euro, or about $1.744 billion. This was a 15 percent drop at current exchange rates.

The decline was driven mostly by Prada’s retail network, which fell 16 percent year-on-year. Tourist traffic was down in Europe and the U.S., but Russia saw double-digit increases and favorable exchange rates following Brexit drove sales in the United Kingdom.

The European market declined by  18%, while the the American market decreased by 15%. Stores in Mexico and Brazil however performed extremely well.

In Asia Pacific sales declined by 18%, 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.

Prada’s sales in Japan for the first half of the year fell 9 percent, attributed to a decrease in Chinese tourists due to a less favorable exchange rate.

In July, Prada took a step into ecommerce with collaborations with MyTheresa and Net-A-Porter, which it credits for improved performance compared to 2015.

A directly-operated Prada e-commerce platform will launch first in China, Hong Kong and Singapore, with international roll-out expected within two years. Prada also plans to boost its digital marketing. Product offerings will be reconfigured to cater to cater to individual markets’ needs.

Prada is also assessing its store network, with plans to close stores that are not strategically placed and open new locations in markets with strong opportunity.

“With the implementation of the first phase of rationalization 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,” said Patrizio Bertelli, CEO of Prada, in a statement.