Prada sales miss estimates as China luxury slump persists

Prada SpA reported first-half revenue that missed analysts’ estimates as demand for its handbags and wallets in Hong Kong and Macau continued to wane.
Sales rose 4 percent to 1.82 billion euros (USD2 billion), the Milan-based luxury goods maker said Friday in a statement. Analysts predicted 1.87 billion euros, based on the median of nine estimates compiled by Bloomberg.
The Asia-Pacific region, Prada’s most important market, showed a “similar negative trend” to the first quarter, when Greater China sales fell 19 percent excluding currency effects, Prada said. Revenue in its wholesale business dropped 14 percent as Prada has trimmed its network of distributors. The company is also opening fewer stores and introducing more bags priced between 1,000 euros and 1,200 euros as it attempts to reignite demand amid a clampdown on extravagance in China.
Sales were “worse than feared,” said Luca Solca, an analyst at Exane BNP Paribas. The company’s efforts to broaden its focus beyond high-priced products should leads to improvements in the second half, he said. “We expect to hear less and less bad news from Prada.”
The stock has dropped 30 percent in the past year, compared with a 52 percent gain in LVMH Moet Hennessy Louis Vuitton SE, the world’s largest maker of luxury goods. Thomas Mulier, Bloomberg