Prada’s profit in decline for the first nine months of 2015
Prada Group said Tuesday its net profit fell for the nine months to Oct. 31.The company recorded net profit of 235 million euros ($258.1 million), a decrease of 26.4% on the year, while operating profit fell nearly 25% to EUR373.9 million.
Revenues were up 1.2%, at EUR2.58 billion, supported by the beneficial effect of currency fluctuations. Stripped of the currency effect, revenues would have fallen 7%, the company said.
The European market has grown in the nine-month period at both current exchange rates (+8.6%) and constant exchange rates (+7.6%). It was boosted by the weakening of the Euro which triggered a notable flow of Asian and American tourists. The Italian market continued to stand out among the various European countries and recorded growth rates well above the average for the area.
The Japanese market has again performed extremely well with growth at both current exchange rates (+10.4%) and constant exchange rates (+4.6%), driven by the rising number of Chinese tourists.
Meanwhile, the Asia Pacific market continued to show the issues highlighted in the previous quarters and has recorded a 4.9% decrease at current exchange rates. This is due to reductions in both local consumption and tourist flows within the region, with Hong Kong and Macau particularly affected.
On the American market sales increased at current exchange rate by 8.5%, but showed a negative underlying trend (-7.6% at constant exchange rates). The significant strengthening of the US Dollar over the period had an adverse impact on tourism, mainly from China and South America, but, at the same time, it encouraged a shift in American consumer spending towards Europe.
Moving on to the retail channel by brand, Prada recorded a 2.1% increase which was entirely attributable to the exchange rate effect. Meanwhile, Miu Miu has grown with revenues up at both current exchange rates (+11.8%) and constant exchange rates (+1.9%). Church’s has also achieved sales growth (+17.6%), a positive trend also on a like-for-like base.
Margins for the period were affected by the lack of organic growth accompanied by an increase in selling costs due to retail network expansion. Other cost items have remained broadly stable as a result of the thorough and ongoing review of business processes in all areas, aimed at increasing efficiency.
EBITDA for the first nine months of the year amounted to Euro 595.4 million or 23.1% of consolidated net revenues and EBIT totaled Euro 373.9 million or 14.5% of consolidated net revenues.