Prada Q1 Profit, Sales Leap, but Cautious on Eurozone

In What's New, Industry News by Accessories StaffLeave a Comment

Prada Summer 2012

Milan—Despite reporting last week a first quarter profit double last year’s and a leap in sales, Prada SpA warned about an “uncertain international economic environment” that could affect future luxurygoods sales.

The company, which floated its listing on the Hong Kong Stock Exchange a year ago, said despite its “excellent results achieved in the first quarter,” the company must “be ready to take any necessary actions to safeguard its assets and preserve its long-term growth strategy.”

For the quarter ended April 30, Prada posted a net profit of 121.7 million euros (about $152.14 million) from 57.7 million euros a year.

Net revenue jumped 48% to 686.7 million euros, with double digit sales growth in all of the company’s markets. Even with the looming Eurozone debt crisis, the European market showed the most growth, rising 57% thanks to “a growing influx of tourists.”

Asia, which comprises about 38% of total sales, grew 47%. Sales in the North America rose 34%.

If Debit Crisis Affects Tourists, ‘It Would Impact Us’

“We are extremely pleased with the results… especially as we have achieved them in an uncertain and very unpredictable international environment,” Patrizio Bertelli, Prada’s ceo, said. “We remain confident of our ability to achieve our objectives and shall closely monitor the economic situation in the countries where we operate.”

Sales through Prada’s 395 directly operated stores were up 41.7% to 564 million euros. Comparable store sales were up 19%.

Meanwhile its wholesale business was up 39.4%. Leathergoods posted the biggest increase, 58.2%, and now accounts for about 62% of Prada’s total business. Apparel sales increased 29.7% and footwear sales were up 36.3%.

Despite the strong showing in the luxury sector, Prada executives said they would closely monitor the economic situations in the Eurozone as well as the United States and Asia.

“If the Greek crisis spread to Spain or Italy it would slow tourist flows. And if it affected tourists, it would impact us,” Prada’s Vice President Carlo Mazzi told Reuters.

Prada reported net operating cash flow of 180.8 million euros in its first quarter and said noted that in 2012 the company will focus on reinforcing its cash-flow generation and financial flexibility.