The Italy-based, Hong Kong-listed luxury brand said
overall net sales fell 5.7% on a constant exchange
rate basis in the six months to the end of July to
€1.47 billion ($1.77 billion).Net profit fell 18.4% to
€115.7 million at the firm that also includes the Miu Miu,
Church’s and Car Shoe brands. Sales in Europe fell by 7.7%,
or 6.6% on a constant exchange rate basis, with only its
clothing lines bucking the downward trend, which is a
problem as margins are higher for bags and shoes.
The brand blamed the stronger euro at the end of the period
which affected tourist spending on shopping.
China’s crackdown on corruption and too-conspicuous consumption had hit luxury sales for many brands in recent years. But while Prada’s rivals have shown quick recovery, the brand continued to struggle. Some have suggested the product has lost its "the must-have" tag. However, recent collections have been well received and its ostrich feather trimmed clothing appears to have been a success, as higher clothing sales in the period show.
But sales of leather goods took a hiding in the first half, dropping 7.9%, and footwear sales that had previously been a bright spot stumbled 9.5%. With luxury sales expected to rise around 2% this year and Gucci enjoying a near-50% increase, some brands were always going to find that their share of the luxury cake would shrink and it seems Prada is facing this reality.