Milan—While many luxurygoods brands are bracing for an apparent slowdown in sales, Prada continues to buck the trend. On Thursday, the Italian company reported a better-than-expected 57% leap in its third quarter profit.
For the quarter ended Oct. 31, Prada posted earnings before interest and tax rose to 217.6 million euros (about $284.5 million) compared to 138.9 million euros a year ago. That was well ahead of analyst’ average estimate that expected earnings of $184.3 million euros.
Net revenue jumped 33% to 791.9 million euros also beating estimates. The Asia-Pacific region led the sales growth for the company, rising 21% excluding currency fluctuations.
By merchandise category, leathergoods posted the biggest increase, climbing 38%. The company reported that all merchandise categories achieved double-digit sales growth. By brand, Prada’s sales were up 29%, excluding currency shifts, and Miu Miu rose 9.8%.
Demand for its brands resulted in a 32% increase in comparable store sales in Europe, buoyed by international travelers.
For the nine month ended Oct. 31, Prada said net profit increased 50% to 408.6 million euros (about $535.3 million). Net sales in the same period increased 35% to 2.34 billion.
Ultra-Affluents Trading Up
Speaking to analysts during a conference call, Donatello Galli, Prada’s finance director, said the company expects its full year comparable store sales to increase by the mid-teens percentage.
Patrizio Bertelli, chief executive, said Thursday that the company’s growth continues to defy expectations. “Prada has again shown that it has the necessary ability and spirit of initiative to generate positive results, even in the difficult current international economic climate,” said Bertelli, who had forecast 15% growth in September.
Prada, along with brands such as Hermès and Cartier, are seeing an uptick in sales among the ultra affluent who are continuing to buy higher-priced merchandise while other luxury brands with broader reaches face decelerating sales.
Moreover, there’s been a shift in demand in China where affluent consumers there are trading up to more exclusive brands at higher prices.
If these trends continue, upscale luxury brands like Prada stand to continue to garner increases, likely more so than luxurygoods sales in general.
Luxurygoods sales next year are expected to increase 5% to 212 billion euros (about $277 billion) compared to a 13% increase in 2011 and an 8% increase in 2010, according to a report by Bain and Altagamma.