Prada First Half Profit Jumps Nearly 60%

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Milan—Buoyed by continued strong sales in Asia, Prada SpA reported today a 59.5% increase in its first half net profit despite worries across the luxurygoods sector that a slowdown in demand could adversely affect sales.

Instead, Prada said net profit for the first six months of the year was 286.4 million euros (about $372 million) compared to analysts’ average forecast for 290.3 million euros.

On Sept. 11, British-based Burberry Group warned that its sales growth in China would be far slower than expected as demand is slower and the Beijing government was instituting a crackdown on conspicuous consumption.

But Prada CEO Patrizio Bertelli said today he remained confident Prada’s growth due to the sharp rise in its first half profit.

“We are aware of the negative market trend but, counting on the strength of our brands and our ability to pursue our objectives, we look forward with confidence to the near future without altering our strategy based on achieving our long-term growth targets,” Bertelli said.

Overall sales in the first half jumped 37% to 1.55 billion euros. Prada’s namesake brand has seen a 40.4% sales increase and Miu Miu a 23.7% increase.

Sales in Asia-Pacific region remained strong, too, increasing 45% compared with last year. Greater China sales rose 50.2% to 334.6 million euros for the first six months.

Revenue in Europe increased 37% helped by sales to tourists visiting from emerging markets.

Despite the more challenging market conditions, Prada said it “confident about the near future and will continue to pursue the retail focused strategy which is an essential pillar of our long-term growth prospects.”

Prada is continuing to expand its own retail base, opening 28 new stores, but closing two, taking the total number of directly-operated stores to 414 by the end of July 2012.

Publicly traded on the Hong Kong Stock Exchange, Prada’s shares have gained 71% so far this year, substantially outperforming the benchmark Hang Seng Index which is up 12% in the same period.

 

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