Prada: Weak Sales In Greater China

After last month's sales slump, Prada once again reported worse performance. Its net profit fell for the first time since its listing in 2011, or 28.2%.

Sales in the Greater China region are most serious.

The Prada group's 2014 full year financial report released by HKEx showed that net profit fell to 450 million 700 thousand euros, or 28.2%, from 627 million 800 thousand euros in fiscal year 2013 to January 31, 2015.

Sales increased by 1% and retail network expansion resulted in cost increase and operating profit of 954 million 200 thousand euros, down 16.5% from 1 billion 143 million 200 thousand euros in the previous year.

In addition, the gross profit margin was 71.8%, a slight drop compared with the same period last year, and the income of wholesale channel and direct channel declined, down 4% and 0.5% respectively.

In the 2014 year's poor performance, the Asia Pacific region is undoubtedly the worst hit area, with sales falling by 3.1%.

The calculation dropped by 4.5% to 1 billion 292 million 800 thousand euros.

In the Asia Pacific region, sales in the Greater China region dropped by 6.3%.

In the global sales of Prada, Asia Pacific accounted for 35.7%, while sales in Greater China accounted for 60% of its Asia Pacific region.

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The negative performance in Macao and the poor sales in the Asia Pacific region also add to the worsening exchange rate volatility in the euro area.

At the same time, the annual retail income in the European region dropped by 4.9%.

Actually,

The bad results of the three quarter results released at the end of 2014 showed that net profit had fallen by 44%.

Reporters noted that Prada in the earnings report explain the reasons for the decline in performance, are blamed for the sudden change in the external environment.

However, relevant experts say that mature Brand Company should make appropriate responses in the light of external environment and consumer market volatility.

Under the severe market environment, Prada is not fully prepared in product links, and it is not consistent with luxury positioning in the past 2014 years.

In response, Prada has said it plans to increase its price at $1000-1200 for mass consumption.

But Zhou Ting, President of the luxury goods field and President of the Institute of wealth quality, believes that short-term internal compensation for loss of performance is likely to dilute the core value of the brand. The brand must face not only the sales performance, but also the shrinkage of the brand value and the credibility crisis.