by winston » Tue Mar 31, 2015 6:21 am
Now Prada looks to cut prices as Asia sales slip
Italian luxury goods company Prada announced a price cut on its sought-after goods in Asia, including Hong Kong, on the same day it reported its first drop in annual net profit since it listed in the SAR four years ago.
Growing retail sales in the Americas and Japan failed to offset declines in Greater China and Europe.
The company reported yesterday its 2014 net profit fell 28 percent to 450.7 million euros (HK$3.78 billion), slightly below forecasts, as overall annual sales dropped 1 percent.
Prada handbags and products will be slashed after Easter in Asia except in Japan, the company said.
Communication and marketing executive director Stefano Cantino did not say how much prices will be cut or the products involved.
He said the company would consider the price cuts in detail after Easter.
Earlier this month, French luxury brand Dior cut prices of Miss Dior and Soft Dior bags, but only slightly.
For example, a Miss Dior bag dropped 12 percent to HK$26,000 from the original HK$29,000.
Another French brand, Chanel, slashed prices by up to 20 percent in mid- March following the depreciation of the euro.
A Boy Chanel handbag went for HK$29,700, a discount of HK$8,000. Classic Flap Bag went for HK$38,000, down HK$10,000.
Asia Pacific sales, which accounted for more than a third of Prada's business, also fell 3.1 percent.
Like other luxury goods makers, Prada has seen weaker sales in China and Hong Kong amid a government crackdown on corruption, including bribery which often takes the form of lavish gifts to officials.
Rival LVMH, which sells a wide range of luxury goods including Louis Vuitton handbags, also noted weakness in the mainalnd and Hong Kong when it announced its annual results in February.
In a statement, Prada, which listed in Hong Kong in 2011, said there was still uncertainty in the international luxury goods market due to local issues and currency volatility.
Prada's 2014 net income of 450.7 million euros was lower than the 627.8 million euros it reported a year earlier and slightly below analyst forecasts of 475.9 million euros, according to Thomson Reuters SmartEstimate.
Prada shares had gained 14.6 percent this year as of market close on Friday, compared with a 3.7 percent rise in the benchmark Hang Seng Index.
The stock closed down 1 percent compared with a 1.5 percent rise in the Hang Seng Index yesterday.
Source: REUTERS
It's all about "how much you made when you were right" & "how little you lost when you were wrong"