Prada Confident for Future as First-Half Earnings Gain 56%
Prada SpA, (1913) the Italian maker of $3,290 leather handbags, said it anticipates industry-leading revenue growth for the year even as market conditions worsen.
The luxury-goods maker is confident of achieving same-store sales growth for the year of 15 percent, Chief Executive Officer Patrizio Bertelli said today on a conference call after Milan- based Prada reported a 19 percent gain in the first half that fuelled a 56 percent profit increase.
“The numbers are still holding” including in the first three weeks of September, Bertelli said on the call. Still, “it’s just common sense to be very cautious right now.”
Luxury-goods companies have reported divergent sales trends since the end of August. Burberry Group Plc (BRBY), the U.K.’s largest maker of luxury goods, said Sept. 11 that same-store sales have fallen in recent weeks. Hermes International SCA (RMS) last month raised its 2012 organic sales growth target to about 12 percent.
“We are aware of the negative market trend but, counting on the strength of our brands and our ability to pursue our objectives, we look forward with confidence to the near future without altering our strategy based on achieving our long-term growth targets,” Bertelli said in a statement.
Earnings before interest and tax rose to 394.9 million euros ($510 million) in the six months ended July 31 from 253.4 million euros a year earlier, Prada said today. The average of five analysts’ estimates was for EBIT was 393.6 million euros. First-half sales increased 36 percent to 1.55 billion euros.
The gain in first-half same-store sales was “incredible,” Rahul Sharma, founder and managing director of Neev Capital, said in an interview with Bloomberg Television. “What you have had for this sector over the last couple of years is that the rising tide has floated all boats.” As economic growth slows, “now you are seeing specific brands doing far better than other brands for company specific reasons,” he said.
Prada does well because it renews as much as 70 percent of its assortment each year, meaning there is always something exciting for luxury-goods shoppers to buy and not see another person carrying, Sharma said.
“Consumers globally need to be enticed to buy,” Bertelli said on the call.
Prada rose 1.2 percent to HK$59.95 in Hong Kong trading today. The earnings were released after markets closed. Luxury stocks in Europe fell after the report.
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