Mar 30, 2012
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Prada keeps retail focus after profit shines

Mar 30, 2012

HONG KONG/MILAN - Italian fashion power house Prada is pushing ahead with its retail expansion plans after a burgeoning army of wealthy Asian buyers helped it beat forecasts with a 72 percent rise in full-year profit.

Prada's Hong Kong Pacific Place Store. Half of the brand's new stores will be in fast-growing markets such as Asia / Photo: Prada

The Milan-based maker of luxury bags and Miu Miu dresses said on Thursday net profit for the year to January 31 was 432 million euros ($574 million), compared with a forecast for 416 million in a Thomson Reuters poll.

Net revenues climbed a quarter to 2.56 billion euros, led by a 42 percent leap in the Asia-Pacific region which accounted for 35 percent of group sales compared with 30 percent in 2010.

"After 75 (store) openings in 2011, we confirm the strategy already communicated and the average 80 openings per year for 2012 and 2013," Prada said.

Half of the new openings will be in fast-growing markets such as Asia, the Middle East, Brazil and Morocco.

The retail channel contributes nearly 78 percent of Prada's revenues, from 71 percent in 2010. Prada directly managed 388 stores at the end of January.

Asian shoppers helped top luxury brands grow by double-digit percentages last year and Italian luxury shoemaker Salvatore Ferragamo is expecting "significant growth" after Asian sales propelled full-year profits above forecasts.

However, investors are bracing for moderating growth this year after China in March cut its growth target for 2012 to 7.5 percent from 8 percent eyed in each of the previous years.

Tim Parker, chief executive of Hong Kong-listed luggage maker Samsonite International, said on Wednesday its sales growth was likely to slow from 48 percent to about 20 percent.

Prada's shares have gained 41 percent this year, beating the benchmark Hang Seng Index's HSI 12 percent rise. The group has a market capitalisation of about $16 billion.

Prada proposed a dividend of 0.05 euro per share.

Set up in 1913 by Mario Prada as a business selling leather bags, trunks and silverware to the European elite, Prada has a "buy" or "strong buy" rating from 10 analysts. Seven analysts have a "hold" rating while two have a "sell" rating.

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