Prada Boosts Revenue Despite Luxury Downturn

4/25/2024, 10:00 AM

Despite inflation and high interest rates: Revenue in the luxury sector increases by 16% - an astonishing achievement.

Eulerpool News Apr 25, 2024, 10:00 AM

Prada Registers Revenue Increase in the First Quarter of the Year Despite a Challenging Market Environment

The Italian luxury fashion company recorded net sales of 1.19 billion euros, representing an increase of 11% compared to the same period last year, and slightly above analyst estimates of 1.16 billion euros based on a Visible Alpha survey.

It is particularly noteworthy that revenue grew by 16% at constant exchange rates at a time when the luxury industry is grappling with a normalization of growth due to inflation and high interest rates that are constraining consumer spending. "As the industry experiences new dynamics, we maintain our ambition to deliver solid, sustainable, and above-average growth," said CEO Andrea Guerra.

Prada's Results Stand in Contrast to Some Competitors. LVMH Moet Hennessy Louis Vuitton Reported a Decline in Quarterly Sales, While Brunello Cucinelli Reported an Increase in Sales in the First Quarter, Supported by a Wealthier Clientele. Kering, on the Other Hand, Forecasts a Significantly Lower Operating Profit for the First Half of the Year Following a Decline in Sales in the First Quarter.

Prada reported that retail, which makes up the largest part of the company's revenue, has grown in all regions, particularly in Japan, driven by local consumption and increasingly by tourists as well. In the Asia-Pacific region, the company saw a 16% increase in retail sales at constant currencies, despite a challenging comparison period as the company benefited from the easing of Covid-19 restrictions in the previous year.

Prada's Strong Performance in This Region Contrasts with the Experiences of Many Luxury Brands Confronted with a Slower than Expected Recovery in China - One of the Industry's Largest Markets, Which is Currently Suffering from an Ongoing Downturn in the Real Estate Sector as Well as Weak Exports and Consumer Demand.

The challenging environment in China particularly affected Kering's results. As expected, the French luxury group reported a decline in first-quarter sales due to weak demand in the country.

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