Milan—Prada SpA reported Tuesday a 14% rise in its first quarter sales and profit, providing the Italian brand one of the best quarterly reports in luxurygoods.
For the quarter ended April 30, Prada posted a net profit increase to 138.2 million euros (about $183.5 million) compared to 121.7 million in first quarter 2012.
Net sales rose to 782.3 billion euros (about $1.04 billion) helped by sales increases at the brand’s own store network. Excluding currency effects, sales were up 15%.
Sales in Asia-Pacific (excluding Japan), which account for 40% of revenues, rose 23% to 315 million euros. Prada’s domestic Italian market was down, while Europe was flat and America grew by 23%.
By category, handbag sales rose nearly 30% to 538 million euros while footwear was down 12% to 118 million euros.
The results were better than the first quarter results of its larger rivals Louis Vuitton and Gucci (Kering) which reported a slowdown in sales in Asia, Europe and other key markets.
Nonetheless, Prada’s report fell short of analysts’ average estimate that expected a profit of 141 million euros on sales of 790.3 million euros.
“It’s still a solid performance, especially given the context,” said David Da Maia, an analyst at Aurel BGC.
Prada’s performance was a slowdown from previous quarters and was noticeable at the end of the fourth quarter when the company posted a 16% increase, less than half the 35% increase it recorded in the previous nine months.
Wholesales Sales Shrink
On Tuesday, Prada—which is listed on the Hong Kong Stock Exchange—said its continued move away from wholesale was partly responsible for the slower growth.
Prada, however, blamed the slowdown on its move toward retail sales and away from wholesale sales. The company’s retail sales grew 19% during the quarter and Prada has opened more than 20 branded stores so far this year as part of its strategy to expand in emerging luxury markets such as Brazil and Thailand while offsetting a reduction in wholesale distribution.
Wholesale sales, on the other hand, declined 9% and will continue “to decline by a high single-digit percentage this year,” the company said, noting “new accounts and signs of recovery in the U.S. market mitigated the shrinkage in the channel” in the quarter, Prada said.
By brand, the Prada brand continues to grow the fastest, up 18% from a year ago to 638.8 million euros (about $842.87 million), bolstered by retail sales in Greater China and the Americas.
Miu Miu had only a 5% rise in sales and continues to underperform, according to Donatello Galli, chief financial officer.
Such growth has been elusive for the other names owned by the group—Miu Miu and the far smaller Car Shoe and Church’s brands.
“We don’t think this year, due to the market conditions, will be a turning point for Miu Miu. We have to be a little bit more patient,” Galli said.
Prada has said it plans to focus its next retail push on the Middle East and the Americas to offset the recession-racked Europe and lessen its reliance on Asia, where growth has been leveling off.