The view from WGSN on the key news and business stories driving the
fashion, style and retail sectors.

Wednesday, 30 November 2011

Prudent Prada impresses as Asia-Pacific demand boosts standout Q3

Despite a standout Q3 performance – earnings leaping 75% and robust sales up 33% - Italian luxury fashion house Prada maintained a cautious air Wednesday, saying it wasn’t immune to a possible economic downturn.

Deputy chairman Carlo Mazzi described the 2012 outlook as "prudent", adding the company was strong enough to weather a year that will be difficult for all businesses.

"Certainly if the economic picture starts to worsen significantly, our clientele will be affected," he said in an interview. "We don't want to forecast a specific scenario for 2012."

Net profit for the group, which listed in Hong Kong in June, rose to €93.6m ($124.7m) in the three months to October 31, from €53.4m a year ago.

Revenue rose to €596m from €449m last time, boosted by its growing strength in Asia-Pacific where sales leapt 46%, accounting for 36% of all business. Sales in Europe rose 33% while North America lifted 24% and even sales in Japan grew 20%.

Indeed, Mazzi cited the group's geographical diversification for helping it cope with any currency turbulence in 2012 and beyond.

"While we will continue to closely monitor the market's behaviour, we remain confident in the strength of our brands as well as in the luxury market's potential," said chief executive Patrizio Bertelli in a statement.

Prada will continue to pursue its long-term growth strategy of geographic expansion of directly managed shops and high-quality products, Bertelli said although Mazzi noted the company still lacks a significant presence in growth areas such as Brazil and China.

The group opened 29 stores in the first six months of the year and is planning to have 550 by the end of 2013, with around half of them in Asia-Pacific.

·    Prada said Tuesday its group chief operating officer Sebastian Suhl has resigned to pursue other business opportunities. The company noted Suhl said he had no disagreement with the board and it is in the process of looking for a suitable replacement.