Prada Sees Revenue Growth Despite Market Challenges

MILAN (Reuters) – Third-quarter net revenues for Prada (OTC:PRDSY) rose 17.7% at constant exchange rates, driven by double-digit retail sales growth in Asia and Europe. This growth was also fueled by a doubling of sales at the smaller Miu Miu brand, the Italian luxury group reported on Wednesday.

Regional Performance

Sales in the Asia Pacific region rose 12% in the third quarter, despite investors' concerns about a slowdown in Chinese demand for luxury goods. Chief Executive Andrea Guerra expressed cautious optimism about China’s prospects, stating, "China is more complicated today and not necessarily improving in the near future," during a post-results conference call.

Brand Performance

The main brand, Prada, reported a 1.7% increase in retail sales during the three-month period, slowing compared to the previous quarter. Guerra noted that "China has been the main detractor."

In contrast, Miu Miu's performance exceeded expectations, now contributing 25% to the group's total retail sales. Miu Miu's former CEO, Benedetta Petruzzo, left in September to join Christian Dior Couture, with a new CEO expected in one to three months.

Looking Ahead

Guerra stated, "We progressed through the year with another quarter of high-quality, like-for-like growth, supporting our positive trajectory in both revenue and margins." Revenues for the first nine months reached 3.8 billion euros.

Industry Context

The luxury sector is experiencing a slowdown, with luxury giant Kering (EPA:PRTP) reporting a 16% fall in organic revenues. Additionally, LVMH noted a drop in Chinese consumer confidence. Some attribute this slowdown to sharp price increases in luxury goods. Guerra remains optimistic, stating, "I think that we are well positioned on entry prices, but we have yet quite a substantial territory (to go) in extending the price range upwards."