Prada Q1 Profits Plunge, May Revise Forecast

In What's New, Industry News by Jeff Prine

Prada presents its Fall/Winter 2014 Women's Advertising Campaign shot by Steven Meisel featuring Mica Arganaraz.

Prada presents its Fall/Winter 2014 Women’s Advertising Campaign shot by Steven Meisel featuring Mica Arganaraz.

Milan—Prada SpA warned today that its may update its full year forecast after a drop in its first quarter profit and sales.

For the quarter ended April 31, Prada’s net profit fell 23.8% from the same period a year earlier, to 105.3 million euros, while earnings before interest and tax dropped 20% on the year, to 156.3 million euros.

Net sales edged down 0.5% to 68.4 million euros ( about $1.05 billion) down from 782.3 million euros in the same period of last year, when sales rose 14%.

‘A Quarter of Transition’

Earnings before interest, tax, depreciation and amortization (EBITDA) fell to 27.5% percent of sales, from 30.8% in first quarter 2013, but Prada said it expected pressure on margins to ease throughout the year.

“The management is closely following the development of the markets… in order to update, if appropriate, the guidance on the 2014 results,” Prada said in a statement to the Hong Kong Stock Exchange.

Reversing previous sales trends, Prada’s sales fell 2.6% in Asia Pacific, where it makes 40% of its income, and 4% in Europe, its second biggest market with a 20% share. Prada’s sales rose 17% in Japan, making it the fastest-growing region, but this failed to offset the currency effect, the decline of the wholesale channel and a slow market in Europe.

Wholesale revenue fell 25% due to rationalization in the channel and stagnant domestic demand in some European countries.

Prada’s sales rose 17% in Japan, making it the fastest-growing region in the quarter, but this failed to offset the currency effect, the decline of the wholesale channel and a slow market in Europe.

Retail sales increased 3% on the year, however.

“This is a quarter of transition,” said Carlo Mazzi, president of the Prada group, which also owns the Miu Miu range, Car Shoe and Church’s. “Orders are expected to pick up in line with 2013.”

Among the brands, Church’s posted the highest increase thanks to a 14% increase in sales.

 

 

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