Leather goods sales decline hits Prada results

Published:  16 June, 2015

Prada reported a net income of €58.7 million (US$65.7 million) for the first quarter of 2015. These results show a massive decline of 44.25% year-over-year compared to the €105.2 million (US$ 118.4 million) reached in the first quarter of 2014, and a 72.7% fall compared to the fourth quarter of 2014.

The fall in revenues and profits can be largely attributed to a decline in sales in China, one of the main markets, as well as in Macau and Hong Kong.

Luxury bags were the most hit segment. The company’s revenues for its leather goods declined 11.4% year-on-year, and the share of this division in the company’s revenues fell from 67% to 63%.

After the sharp fall of the company on the Hong Kong Stock Exchange (-6%, a three-year low), the Associate Director at the Hong Kong-based financial company United Simsen Security, Jackson Wong, stated in an interview with CNBC that the 44% drop was a surprise and that concerns are arising regarding whether Prada will or will not be able to maintain its profit margins.