Prada’s profit defies luxury market slowdown

"I think we must stay calm and be less hysterical. I don't see such a dramatic market," said Patrizio Bertelli, chief executive of Prada. The reason for his exemplar calm: an impressive 59.5 percent hike in net profit during the first half of the year.

"Today, looking at numbers in August and September, we are convinced that we will meet the targets indicated in our budget," Bertelli said without giving details yet immediately counteracting the ‘domino effect’ caused last September when Burberry posted weaker than expected figures and warned about the stoppage in the consumption of luxury goods.

The group's net profit for the six months through July reached 286.4 million euros (372 million dollars) compared with a forecast of 290.3 million euros from six analysts polled by Thomson Reuters. On the other hand, Prada’s CEO Patrizio Bertelli said he expected Prada's earnings before interest, tax, depreciation and amortisation (EBITDA) to improve this year.

Thus, EBITDA rose 49 percent to 469.4 million euros, or 30 percent of consolidated net revenue. Bertelli also assured that he would raise prices only to adjust for currency trends

Earnings before interest and tax (EBIT) rose to 394.9 million euros, that compares to the average of five analysts’ estimates compiled by Bloomberg, that was 393.6 million euros. First-half sales increased 36 percent to 1.55 billion euros.

As per back his confidence, their eponymous label and Miu Miu have been the main drivers of growth, posting revenue up 40.4 percent and 23.7 percent respectively. "We think that considering all markets at the same level is wrong. We must accept markets' diversity and adapt to different needs and traditions," the CEO said, adding Prada was reducing inventories to keep costs under control.

The Asia Pacific market grew the most, accounting for more than a third of Prada's total net revenue. Greater China sales rose 50.2 percent to 334.6 million euros.

Analysts quoted by Reuters said Prada's leather goods sales tend to be more resilient than apparel during an economic downturn and expect the company to outpace its competitors due to its strong positioning in handbags and its smaller store network.

Prada reported revenue of 1.55 billion euros for the first half of the year on August 6 and has seen its Hong Kong-listed shares to gain 71 percent so far this year, surpassing the benchmark Hang Seng Index which is up 12 percent.

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