UPDATE 1-Prada sales improve after revenues drop 10 pct in 2016
(Adds details, CEO comment)
By Giulia Segreti
MILAN Feb 13 Luxury fashion group Prada said sales had accelerated in the past two months, particularly in Greater China and Russia, pointing to an improving outlook after its revenues slumped last year.
The Italian group, which has said it expects to return to profit growth this year after being hit by the downturn in global luxury spending, reported on Monday a 10 percent decline in revenue for 2016.
"However positive progress in sales trend were seen in the second half of the year, particularly in December 2016 and January 2017," Prada said in a statement.
Business improved after a 25 percent drop in group net profit in the first half of 2016. Sales in Greater China grew in the final quarter of 2016 and Russian sales were up "double-digit".
CEO Patrizio Bertelli said in the statement he was confident that a restructuring of the business, which was still under way, and the group's new strategies would ensure its future growth.
Greater China is Hong Kong-listed Prada's biggest market. Last year the group also saw sales in Japan fall 13 percent at constant exchange rates, after five years of consecutive growth, due to fewer tourists from China.
The Milan-based group is trying to turn itself around by cutting back its retail network and selling more fresh and accessible products, as it faces rising competition from new brands and traditional rivals like Gucci.
Gucci, owned by French luxury group Kering, had also seen sales decline in recent years as consumers shunned mega-brands in favour of niche products. But Gucci sales rebounded more than 20 percent in the fourth quarter of 2016 with the help of new products.
STRONG RESPONSE
Prada said its consolidated sales fell 10 percent in 2016 to 3.18 billion euros ($3.4 billion) in line with a Thomson Reuters analyst estimate. At constant exchange rates group sales were down 9 percent.
It is due to release detailed 2016 results in April.
In the year to Jan. 31, 2017, retail sales, which are over 80 percent of total group sales, shrank 14 percent at current exchange rates from a year earlier.
Revenue for the group fell across all regions last year. In the Asia Pacific, its biggest region, Prada sold 12 percent less than the previous year at constant exchange rates.
The group is cutting back on its retail network after a rapid expansion following its 2011 listing when it also raised the prices of its handbags at a time of weakening luxury spending.
It said there had been "an excellent market response" to its latest footwear and leather goods collections while ready-to-wear had seen "concrete results" in sales in the second half of last year.
Wholesale revenue rose by 14 percent in 2016 at constant exchange rates, helped by orders from multi-brand online retailers such as Yoox-Net-A-Porter and mytheresa.com. ($1 = 0.9398 euros) (Reporting by Giulia Segreti, editing by Valentina Za and Susan Fenton)