• H1 earnings drop 21%
  • Sales climb 1.3%
Prada earnings were affected by weakness in Europe

Prada earnings were affected by weakness in Europe

Italian fashion house Prada has booked a drop in first-half earnings due to weakness in Europe, and said there are no signs of improvement in the short term.

Net profit in the six month period amounted to EUR244.8m (US$314.7m), a 21% drop on the prior year. Margins, the company said, were hit by "unfavourable" forex trends and by "broadly stable" revenues, which was insufficient to absorb an increase in costs due to retail network expansion.

Consolidated net revenues totalled EUR1.75bn, a 1.3% increase on the prior year period.

In Asia Pacific, sales were down 2.1% at current exchange rates, with performance remaining particularly weak in Korea, Hong Kong and Singapore. The Americas market shows some positive signs, with sales up 8.2%. In Europe, however, weaker tourist flow and the negative general economic environment meant sales fell slightly at constant exchange rates, Prada said.

"Despite the difficult political and macroeconomic environment and unfavourable forex trends throughout the period, the Prada Group continued to prioritise long-term growth objectives with investment aimed at increasing brand value. At the same time, it sought to reduce short-term pressure on margins with measures to contain costs across the group," said CEO Patrizio Bertelli.

"The position now reached by the group on the luxury goods market constitutes a solid base for medium-term growth of revenues and margins. We shall pursue such growth, paying ever greater attention to excellence, through a focused investment policy and the constant monitoring of costs."