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Prada Struggles to Compensate for Weak Demand in China

Miu Miu is continuing to grow at a healthy clip, however.
Prada's fall 2015 ad campaign.

Prada's fall 2015 ad campaign.

For the past several quarters, market conditions in Greater China — Macau and Hong Kong particularly — have weighed heavily on Prada Group's bottom line. This continues to be the case for the first half of 2015, but the Milan-based luxury goods company is working to offset that.

"Sales in the first half of 2015 reflect an economic and exchange rate landscape that remains rather volatile with the continuing weakness of important markets like Hong Kong and Macau and the uncertainty that is looming on other Asian markets," Prada Group CEO Patrizio Bertelli said in the company's latest earnings report, released Friday.

While the group didn't provide exact figures for its performance in the Asia-Pacific region (that bad, huh?), it did see strong revenue growth in Europe — up 12 percent at current exchange rates and 11 percent at constant rates — and in Japan, where sales were up 12 percent at current exchange rates and 5 percent at constant. Currency fluctuations had a positive effect in the Americas and the Middle East, too, contributing to a 15 percent increase in revenue in both of those regions.

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By brand, Miu Miu continued to outpace Prada, with revenues up 19 percent at the former compared to a 5 percent increase at the company's namesake brand.

Besides weak demand in China, Prada also saw a significant drop in wholesale revenue to €248 million (about $270 million), a decrease of 14 percent. That's not surprising: For years, Prada has been downscaling its wholesale business in favor of bolstering business at its own stores. Sales at those stores were up 8 percent at current exchange rates.

Overall, revenue was up 4 percent to €1.8 billion (about $2 billion). We won't know Prada's profitability, which has declined over the past few quarters, until Sept. 30.