Prada FY16 revenues decline 9 percent
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Business
Prada net revenues for the year ended January 31, 2017 declined 9 percent at constant and 10 percent at current FX to 3,184.1 million euros (3,375 million dollars), compared to the same period in 2015.
“The Prada Group has delivered a satisfactory set of results in-line with market expectations for 2016, a challenging year of transition for the company. The retail strategy has shifted from geographical expansion to network rationalisation and digital integration. I am confident that our creative vision combined with investment in online and offline engagement with our customers put us firmly on the path to sustainable growth,” said Patrizio Bertelli, Prada CEO in a statement.
Retail sales dropped 13 percent, wholesale rose 15 percent
Sales at the company’s retail channel fell 13 percent at constant and 14 percent at current FX to 2,634.9 million euros (2,793 million dollars). The company said there was a progressive improvement in the trend in the second half of the year, especially in the final months.
Wholesale channel sales increased by 15 percent at constant and 13 percent at current FX to 504.4 million euros (534 million dollars), owing to, the company said, encouraging results from new partnerships with leading etailers. Licensed business grew by 3 percent with both eyewear and fragrances witnessing positive trends, generating royalties of 45 million euros (47 million dollars).
Prada said, trading conditions in Europe were mixed for most of the period and ended the year with a decline of 5 percent at constant FX. Growth in the UK was driven by local consumption and tourists taking advantage of the weaker sterling while continued outperformance in Russia generated double-digit growth over the year.
The rest of Europe continued to be impacted by the decline in tourist flows, particularly in France, which in the final quarter of the year however saw significant signs of improvement. Despite an overall negative performance of 12 percent decline at constant FX, Asia Pacific, the company said, was very dynamic in the second half of the year. China recovered in the third quarter and began to deliver rapid growth. Hong Kong and Macau have significantly reduced levels of sales contractions seen in recent years, with notable recoveries towards the end of the year.
Sales in the Americas were down 12 percent at constant FX, impacted by falling tourist flows in the United States. Prada saw positive performances in Brazil and Mexico. After five years of consecutive growth, sales in Japan declined 13 percent at constant FX as the stronger yen discouraged Chinese tourists, while the Middle East declined 10 percent at constant FX.
Financial highlights of the year
The company added that implementation of rationalisation program to streamline operational and management processes significantly mitigated the impact on margins of the decline in revenue. Prada maintained a high gross margin of 72 percent and optimised its cost structure, reducing operating expenses by 10 percent year-on-year and creating a leaner, more efficient business.
EBITDA amounted to 653.4 million euros (692 million dollars), 20.5 percent of revenues and EBIT amounted to 431.2 million euros (457 million dollars), 13.5 percent of revenues against 14.2 percent in FY 2015.
Net income amounted to 278.3 million euros (295 million dollars), 8.7 percent of revenues compared to 9.3 percent in FY 2015. The board has proposed to the Shareholders’ Meeting, called for 31st May, a dividend of 12 euro cents per share, up 9 percent compared to the 2015 dividend.
In shortPicture:Facebook/Prada