Prada looks to China for growth after rough year for sales

Prada on Monday reported a ten percent fall in sales for the year through January but said it was encouraged by a better second-half performance, notably in mainland China.

Prada looks to China for growth after rough year for sales
A model presents a bag for fashion house Prada at the Spring-Summer 2016 Milan's Fashion Week on June 21, 2015. Photo: AFP

The Italian-based but Hong Kong-listed fashion powerhouse saw sales fall across all regions with revenue in the 12 months to January 31 falling to 3.18 billion euros ($3.4 billion), down from 3.55 billion euros in the previous financial year.

The overall fall — 10 percent at current exchange rates, nine percent at constant rates — was broadly in line with expectations for the luxury handbag producer.

The biggest drop was registered in Japan, where sales fell 13 percent after five consecutive years of growth. The company attributed the trend to a reduced flow of tourists from China due in part to the yen appreciation.

Sales for the rest of Asia-Pacific were down 12 percent but Prada said the rate of decline had slowed in Hong Kong and Macau while “rapid growth” resumed in mainland China from the third quarter.

Europe was hit by a reduction in the number of high-end shoppers visiting France and Italy, while Russia, which registered double-digit growth, and post-Brexit Britain bucked the trend.

The British market, subdued in the first half, was helped by a tourism boom fuelled by the fall of sterling in the wake of the June 2016 vote to leave the European Union.

After several years in the doldrums largely as a result of an economic slowdown in China, Prada predicted in August that it would return to earnings and sales growth in 2017 after taking the scissors to its cost base.

It is also aiming to double online sales in each of the next three years.

“As noted in my comments on the first six-month results, this past year we implemented a profound phase of business process rationalization that is still underway and identified important strategies to secure the group's future growth,” said CEO Patrizio Bertelli.

“I am confident that this new global vision will enable our brands to fully express their strong potential, and generate sustainable growth.”

Prada will hope the second-half momentum is sustained as their 2017 spring-summer collections begin to hit boutiques around the world.

After several seasons in rival Gucci's creative shadow, Miuccia Prada's latest collection was hailed as a return to form at the catwalk shows in Milan in September.


Romanian billionaire and seven others die in Milan plane crash

A light aircraft piloted by Romanian billionaire Dan Petrescu crashed into an empty office building near Milan on Sunday, killing him, his wife and son, and all five others aboard.

Police and rescue teams outside the office building where a small plane crashed in the Milan suburb of San Donato.
Police and rescue teams outside the office building where a small plane crashed in the Milan suburb of San Donato on October 3rd. Photo: Miguel Medina/AFP

The single-engine Pilatus PC-12 had taken off from Milan’s Linate airport shortly after 1pm headed for Olbia in the north of the Italian island of Sardinia.

It crashed just a few minutes later into a building in San Donato Milanese, a town southeast of Milan, according to aviation agency ANSV, which has opened an investigation.

Witnesses said the plane was already in flames before it crashed into an office building undergoing renovations.

Petrescu’s 65-year-old wife, who also had French nationality, and their son Dan Stefano, 30, were killed.

Italian media identified the other passengers as entrepreneur Filippo Nascimbene, a 33-year-old from Lombardy, with his wife, young son and mother-in-law, who have French nationality.

Petrescu, 68, was one of Romania’s richest men. He headed a major construction firm and owned a string of hypermarkets and malls. He also held Germany nationality, the Corriere della Sera newspaper reported.

Flames engulfed the two-storey building, next to the yellow line subway terminus.

“The impact was devastating,” Carlo Cardinali, of the Milan fire brigade, told news agency Ansa.

Deputy prosecutor Tiziana Siciliano was quoted by Corriere as saying that the plane’s black box had been recovered.