Prada Group reports disappointing financials for the first quarter of 2014, with sales falling 0.6 percent to 777.7 million euros mainly due to the strength of the euro. Revenue was also affected by a program of closing some wholesale accounts to improve its image and stagnant domestic demand in some parts of Europe, Prada said. Net income fell 24 percent to 105.3 million euros ($144 million) in the first quarter.
Prada’s European sales dropped 4.1 percent in the first quarter while The Asia Pacific area recorded a 3.9% increase at constant exchange rates. The performance of this area was affected by a slowdown in Korea, Hong Kong and Singapore while China, Macau and other Asian markets continue to show healthy rates of growth. In spite of bad weather conditions, the Americas retail channel in that area achieved 16.5%. Japan continues to perform well and constant exchange rate growth stood at +30.5%.
The Miu Miu brand registered a 7.3% sales growth, at constant exchange rates (+1.9% at current exchange rates), with growth achieved in all geographical areas (except Italy) and double digit growth in all important markets like Asia Pacific, the Americas, Japan and the Middle East. Church’s also achieved double digit sales growth of +13% at constant exchange rates (+13.5% at current exchange rates) while Car Shoe sales decreased.
Thanks to cash flows generated during the quarter, the net financial positionimproved by Euro 53 million to stand at a positive Euro 349 million, after capex for the quarter of Euro 117 million.
Prada dropped 6.9 percent to close at HK$53.45, the biggest drop since October 2011. The stock has lost 23 percent this year, compared with a 1.5 percent decline in the benchmark Hang Seng Index.
“For the following months the management will be focused on the improvement of the shop performances both with strict control on costs and actions to sustain sales,” CEO Patrizio Bertelli said in the same statement.