Prada SpA (01913.HK) plans to add 30 new stores this year, 24 fewer than last year, amid an uncertain environment in the luxury retail market, the Hong Kong Economic Journal reported Tuesday, citing the Italian firm’s management.
It had 594 stores at the end of January.
Not only will the brand slow down its expansion, management said in an investor briefing, but it will sell more lower-priced handbags in the 1,000-1,200 euro range.
Beijing’s anti-graft campaign has driven the first decline in net earnings at Prada since the firm listed in Hong Kong in 2011.
The luxury brand’s net profit for the year to the end of January slid 28.2 percent from a year earlier to 451 million euros (US$488 million), falling short of market estimates.
Same-store sales were flat, and business in Hong Kong and Macau remained lackluster.
The management expects to make more price cuts in mainland China.
The fall in net profit was partly the result of uncertainties in the economy and social instability in various markets, the company said.
Asia-Pacific sales last year dropped 4.5 percent to 1.25 billion euros, accounting for 35.7 percent of total sales.
Sales in Europe, meanwhile, fell 4.9 percent to 739 million euros, or 21 percent of total sales.
Overall gross profit margin declined to 71.8 percent from 73.8 percent in the previous year.
This article appeared in the Hong Kong Economic Journal on March 31.
Translation by Vey Wong
[Chinese version 中文版]
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