With sales at its namesake brand sliding 8 percent, Prada Group reported Friday that it took in a net profit of €319 million (about $392 million) in the nine months ending October 31 — a 27.6 percent slide from the same time last year.
This last quarter has been particularly brutal. In the first half of the year, sales in the Far East, a major market for the company, dropped 2 percent. That deepened to a 13 percent dent in the third quarter.
As many luxury brands and mass retailers have been saying this fall, Prada execs attribute the company's sub-par performance partly to tough economic and political conditions that weigh negatively on consumers' willingness to spend. But it's not just that, they say. Prada's team writes in its third quarter report that "the luxury market is undergoing a reshaping phase, the extent and nature of which is not yet entirely clear."
Someone got a crystal ball handy?
While footwear saw a 17 percent gain in the third quarter across Prada Group's brands, sales of leather goods were down by 11 percent. To cope, Prada is reworking and widening its merchandising mix, introducing new products at the €1,000 to €1,200 price range.
On the upswing, the company says it is focusing more on Miu Miu, sales of which grew 4 percent in the quarter. While we're glad to see the younger brand making gains, the bigger question is how the executive team is going to figure out its big sister's positioning.