Prada confident on China, sees recovery in Europe
HONG KONG/MILAN (Reuters) - Prada (1913.HK: Quote) is seeing green shoots in Europe and feels confident about China, its biggest market, even though sales slowed in the first half, the luxury Italian fashion house said on Tuesday.
The Hong Kong-listed group, whose first-half net profit fell short of expectations, said appetite for its colorful 1,500-euro leather handbags in China, particularly in second-tier cities where it was opening shops, was showing no sign of abating.
"China is performing in a very good way and growth is still very high," Chief Financial Officer Donatello Galli said on a conference call on Prada's first-half results. He said investment plans in the country remained unchanged.
Sales growth in Greater China, including Hong Kong, slowed to 20 percent in the first half from 35 percent a year ago.
Chinese luxury spending has been hit by a government crackdown on gift-giving and conspicuous spending, affecting luxury goods, including upmarket watchmakers and designer handbag brands.
Greater China, including Hong Kong, makes up 21 percent of Prada's revenue.
In Italy, which accounts for 18 percent of total sales, Prada said the sales decline at its shops had slowed down but it was too early to say its home market had turned a corner.
"In terms of domestic demand in Italy I think it is too early to say if we reached a bottom," Galli said.
For Europe as a whole, Galli said the brand had seen an increase in tourist spending and the economy was showing signs of a very gradual recovery. Continued...