Footwear was the best performing product category for the Prada group in the first half ended July 31, which was otherwise a lackluster semester for the fashion group, and Church's was the brand that grew the most.
Prada said that it would review its full-year guidance after experiencing a more difficult than expected business environment stemming from unfavorable exchange rates and a general fall in consumption. It added that it would introduce a “rigorous” cost control program to protect its operating margins but does not intend interrupting investments to expand the group's international presence. The updated guidance is scheduled to be released on Sept. 19 along with a full set of first-half results.
In the meantime, Prada unveiled sketchy preliminary results that showed group sales inching up by 1 percent to €1.750 billion during the six-month period. At constant exchange rates, revenues grew by 4 percent.
Wholesale revenues were up by 1 percent to €288 million, or by 2 percent at constant currency rates. The distribution channel recovered from the 25 percent decline seen in the first quarter, which resulted from a rationalization of the portfolio of wholesale clients.
Meanwhile, the crucial retail channel booked a 1 percent increase in sales to €1,442 million. On a currency-neutral basis, the group's 566 directly-operated stores (DOS) raised their sales by 5 percent. But financial analysts noted that the data actually conceal a slowdown in same-store sales. An equity research group, Morningstar, noted that the DOS base has gone up by nearly 5 percent since the end of 2013 so that same-store sales were flat in the best-case scenario.
Prada said that in the Asia-Pacific region group sales grew by 2 percent at constant exchange rates, but were down by 2 percent at current exchange rates due to weakness in South Korea, Hong Kong and Singapore. In China, sales rose by 12 percent in the local currency. A stock broker, Bocom, pointed out that Chinese sales accelerated after rising by 10 percent in the first quarter, probably because of the contribution of new stores.
In Europe, sales were down by 1 percent both at constant and current exchange rates due to a fall in tourist flows and a weak economic environment that affected domestic consumption in many countries.
In the Americas, first-half sales were up by 14 percent at constant currency rates and by 8 percent in terms of euros thanks to high domestic demand and a greater contribution from tourists. In Japan, revenues increased by 19 percent at constant exchanges and by 10 percent in yen, while in the Middle East sales rose by 21 percent at constant rates and by 16 percent in euros.
By brand, Prada increased sales by 5 percent at constant rates and by 1 percent at current rates, while Miu Miu was up by 7 percent and 3 percent, respectively. Bocom noted that this was the first time that Miu Miu outpaced Prada in terms of growth. Church's was the fastest-growing brand with sales up by 12 percent at constant rates and up by 14 percent in euros. Car Shoe was up by 3 percent and by 2 percent, respectively.
By product category, sales of shoes across the group went up by 23 percent at constant currency rates and by 19 percent in euros. They were followed by clothing, up by 18 percent and by 14 percent, respectively. Leathergoods revenues dropped by 1 percent at constant rates and by 5 percent at current rates. The group explained the decline with the drop in spending by tourists, who tend to focus on that product category. The group added that the men's category enjoyed double-digit sales growth, underpinned by a strategy to develop sales in this segment in all geographies.