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Prada reports 13 percent decline in H1 net revenues

By Prachi Singh

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Business

Net revenues at Prada for the first six month period to July 31, 2016 totalled 1,554 million euros (1,740 million dollars), representing a decline of 13 percent at constant FX and 15 percent at current FX compared to the same period in 2015. Sales through the Group’s retail network fell 16 percent year-on year at constant FX to 1,277 million euros (1,430 million dollars).

Commenting on the growth measures, planned by the company, Patrizio Bertelli, CEO of Prada said, “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. I refer in particular to three principal lines of action that include rolling out our e-commerce platform, giving priority to China, Hong Kong and Singapore, redefining the components of our offer and rigorous review of retail network including closure of non- strategic locations and selective openings in high potential markets.

Low demand results in sales decline in major markets

The European market sales declined 18 percent at constant FX, impacted by the decline in tourist flows, while domestic consumers proved to be more stable. Russia posted a double digit organic growth, and the UK market was positive, which benefited from a more favourable exchange rate as a consequence of Brexit. The American market with 15 percent sales decline at constant FX was also impacted by the fall in tourist flows. Stores in Mexico and Brazil however performed well.

In Asia Pacific, sales were down 18 percent at constant FX, as the negative economic backdrop continued to impact performance in both Hong Kong and Macau, but signs of improvement have were visible since July across Greater China. After a period of consistent growth since 2010, sales in Japan fell 9 percent at constant FX mainly due to lower tourist flows from China caused by a less favourable exchange rate. The Middle East performed in-line with the previous year at constant FX, driven by a recovery in local consumption.

With revenues of 253 million euros (283 million dollars), the wholesale channel, Prada said, was in line with 2015, showing the positive initial results from the new collaboration with leading e-tailers. Progress in licensing was driven both by growth in eyewear and fragrances with royalties growing overall by 8 percent, reaching 25 million euros (28 million dollars).

EBITDA amounted to 330 million euros (369 million dollars), 21 percent of revenues compared to 24 percent in H1 2015 and EBIT amounted to 214 million euros (239 million dollars), 14 percent of revenues against 16 percent in H1 2015. Net income amounted to 142 million euros (159 million dollars), representing 9 percent of revenues compared to 10 percent in 2015.

Picture:Prada

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