Prada 2014 profit dips on falling sales in China, Europe

A Prada store in Beijing.
Getty Images
A Prada store in Beijing.

Italian luxury goods company Prada reported a 28 percent fall in its 2014 net profit on Sunday, as growing retail sales in the Americas and Japan failed to offset declines in Greater China and Europe.

The company reported net income of 450.7 million euros ($489.8 million) in the year ended Jan. 31, down from 627.8 million euros a year earlier and slightly below an analyst forecast of 475.9 million euros, according to Thomson Reuters SmartEstimate.

Prada chief executive Patrizio Bertelli, said in a statement there was still uncertainty in the international luxury goods market due to local issues in certain markets and currency volatility.

"The group is working to contain costs in the short-term and on broader measures that will increase the overall efficiency of the business in terms of both the supply chain and store productivity," he said.

Annual sales, which were published on a preliminary basis last month, fell 1 percent to 3.55 billion euros and the company said it would have to contain costs and open fewer shops than planned amid declines in Greater China and Europe.

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Asia sales at the Milan-headquartered company fell 5 percent despite a positive exchange rate impact. Much of the slide came from Hong Kong and Macau where the company said market conditions in the second half had deteriorated "significantly".

Pro-democracy protests shut down major roads in Hong Kong for 79 days at the end of last year and the number of Mainland Chinese tourists fell off sharply.

Rival LVMH, which sells a wide range of luxury goods including Louis Vuitton handbags, noted weakness in China and Hong Kong when it announced its annual results in February.

Prada shares have gained 14.6 percent so far this year, compared with a 3.7 percent rise in the benchmark Hang Seng index as of market close on Friday.