Italian designer Prada is the latest luxury group to be knocked off its pedestal by waning demand for big labels.
Like Louis Vuitton and Gucci, Prada has suffered from a move away from big-label and big-logo brands and it reported sales growth of just 1 per cent in the first half of this year – compared to double digit growth in previous years. It is the slowest half-yearly sales growth in three years.
Currency changes and the strong Euro hit Europe where sales were down 1 per cent in first half while the Americas region picked up 14 per cent over the six months.
Trading in Korea, Hong Kong and Singapore was worse than expected but China grew by 12 per cent at constant exchange rates.
Group sales for the six months ending in July at the Hong Kong listed but Milan based brand were €1.75bn – up 4 per cent on a constant currency basis.
Prada chief executive Patrizio Bertelli said the group had “operated in a more difficult political and macroeconomic environment than expected” with “unfavourable exchange rates and a general fall in consumption.”
He said: “Against this background, we have continued to focus our efforts on medium/long-term growth: our industrial, marketing and retail investments to sustain the quality of our products and our relationships with clients will continue to bear fruit.”
The big luxury brands have tried to stop producing as many products at the cheaper end of their ranges and have reduced the number of cheaper “entry-level” products which were predominantly logo-heavy. Some of these products fell out of favour as shoppers believed these products had become too common.
Separately, US brand Ralph Lauren reported a 10 per cent fall in first quarter net income to $162m compared to a year ago – but this was better than analysts expected