ITALIAN FASHION house Prada dismissed talk of a sharp slowdown in spending on luxury goods, posting a 59.5 per cent jump in net profit and saying its sales in the past two months were on track with expectations.
“I think we must stay calm and be less hysterical. I don’t see such a dramatic market,” said Patrizio Bertelli, chief executive of the maker of minimalist dresses which competes with the likes of Louis Vuitton and Gucci.
His comments on an analyst conference call come after Britain’s Burberry Group said on September 11th its sales growth in China was far slower than expected, spooking luxury investors and raising concerns that the entire sector was in danger of stumbling.
China’s luxury market, on which global luxury powerhouses have become increasingly dependant, has been hit by weaker demand than expected due to slowing growth and a crackdown by Beijing on conspicuous consumption.
But Milan-based Prada, also popular for its coloured Miu Miu dresses and leather handbags, said it expected “good double-digit growth” in 2012 at shops open more than a year.
“Today, looking at numbers in August and September, we are convinced that we will meet the targets indicated in our budget,” Bertelli said. Asked about Burberry, Bertelli declined to comment on its competitor, but said Prada benefited from a “flexible” offer which was responsive to conditions in its different markets.
Bertelli said he expected Prada’s earnings before interest, tax, depreciation and amortisation (EBITDA) to improve this year. He said he would raise prices only to adjust for currency trends.
The group’s net profit for the six months through July reached €286.4 million compared with a forecast of €290.3 million from six analysts polled.
First-half EBITDA rose 49 per cent to €469.4 million, or 30 per cent of consolidated net revenue. The company’s own brand and Miu Miu have been the main drivers of growth, posting revenue up 40.4 per cent and 23.7 per cent respectively.
The Asia Pacific market delivered the highest growth rate, accounting for more than a third of Prada’s total net revenue. Greater China sales rose 50.2 per cent to €334.6 million. – (Reuters)
