June 8 (Bloomberg) -- Prada SpA, the Italian maker of $2,950 perforated patent-leather handbags, said it’s confident in its brands amid rising economic risks after first-quarter profit more than doubled.
Net income rose to 121.7 million euros ($153 million) in the three months ended April 30 compared with 57.7 million euros a year earlier, the Milan-based company said yesterday in a statement. Revenue climbed 48 percent to 686.7 million euros.
Europe’s sovereign-debt crisis and slowing economic growth in China have so far failed to reduce demand for high-end goods. Paris-based LVMH Moet Hennessy Louis Vuitton SA, the world’s largest maker of luxury products, said in April that sales growth was accelerating. Prada sales surged 57 percent in Europe and 47 percent in the Asia-Pacific region in the quarter.
The results “are to a certain extent almost too good to be true,” Erwan Rambourg, an analyst at HSBC in Hong Kong, wrote in a note to clients. He has an overweight recommendation on the stock. “Prada looks like a very good story.”
The earnings were released after the stock market closed in Hong Kong, where the company’s shares trade. Prada fell 2.4 percent to HK$45.45 yesterday, giving the owner of the Prada, Miu Miu, Church’s and Car Shoe brands a market value of HK$116.3 billion ($15 billion).
While the quarterly performance is encouraging, “we must consider, at the same time, the rising risks deriving from the uncertain international economic environment, in order to be ready to take any necessary actions to safeguard our assets and preserve our long-term growth strategy,” Prada said yesterday.
Shares of luxury-good companies gained after the announcement. LVMH rose 2.3 percent in Paris, and Swatch Group AG, the owner of the Omega watch brand, advanced 4.6 percent in Zurich.
Prada’s revenue increased in all regions, including 34 percent in the Americas and 54 percent in each of Greater China and Italy. Leather goods was Prada’s best-performing category.
Retail sales climbed 49 percent on a reported basis and 19 percent at stores open at least a year, excluding currency swings.
Prada plans to open 100 stores in 2012, and 80 in each of the next two years, in markets including Brazil, China and Persian Gulf countries, Chief Executive Officer Patrizio Bertelli said in May. The company had 395 directly operated stores and 25 franchises at the end of April, it said yesterday.
Earnings before interest, taxes, depreciation and amortization advanced 77 percent to 200.1 million euros, representing 29.1 percent of sales.
Prada said it has had a positive net financial position since Jan. 31 and had net cash of 122.4 million euros at April 30. An increase in long-term bank debt is mainly due to new funds raised in Japanese yen, Prada said.
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