Prada reported a shallower than expected rise in third-quarter net profit to €133m as stronger sales in the US and Japan failed to offset slowing growth in China and Europe, and the effect of currency swings.
In a presentation, Prada, which also makes the MiuMiu and Church’s brands, said its Far East region had seen “moderated growth, notably in Greater China”. A Reuters poll of analyst forecasts had expected a net profit of €154m in the third quarter.
Prada is the latest luxury goods group to report slowing growth in China, which companies including Rémy Cointreau have blamed in part on a clampdown on gift giving and lavish spending by the Chinese authorities.
Net profit rose to €133m in the three months to the end of October, from €122.1m a year earlier, Milan-based Prada said. Revenues rose 7.1 per cent to €839.6m. Third-quarter sales grew 13 per cent, excluding currency swings.
Sales in its retail business accelerated in the Americas and Japan over the period, Prada said.
“Unfavourable exchange rates and softening consumption patterns in some regions could weigh on results and thus will require increasing attention by the management in order to ensure profitability and continue the retail expansion,” Prada said.
Prada shares have lost nearly 10 per cent over their value over the past month on expectations that the company would be hit by the slowing of sales from China which is being felt across the industry.
The company, led by designer Miuccia Prada and her husband Patrizio Bertelli, has proved one of the most resilient players in the industry as its fashion forward designs have grown beyond a cult following to one of the world’s fastest-growing luxury brands.
In a note published this week, Mario Ortelli, an analyst at Bernstein Research, said he believed “investors recent concerns are excessive”.
Mr Ortelli believes Prada will be able to sustain growth by opening about 200 new stores up until 2015, focusing on emerging market consumers, and growing its leather goods and MiuMiu brand business.
Prada said it had 516 directly operated stores at the end of October in 70 countries. Since the start of this year it has spent €416m mostly on opening new stores, buying property in London and St Petersburg, and renovating old stores.