Prada Has Been Hit By Double Sales Of Anti Corruption And Exchange Rate In China

Foreign media said that mainland China and Hongkong were the most important growth points for Italy luxury brand Prada.

Now, these two places have become the primary factor of dragging profits.

According to the Wall Street journal website reported on September 15th, due to the decline in sales in mainland China and Hongkong, Prada's net profit in the first half of the year has shrunk by nearly 1/4.

The lucrative mainland and Hongkong have become the soft spot of the entire luxury sector.

Reported that, and many others

Similarly, Prada's sales in the mainland continue to suffer. Chinese consumers have chosen to buy goods from Europe and Japan, because European and Japanese handbags and other luxuries are cheaper because of exchange rate reasons and without high import taxes.

China's continued crackdown on corruption and gift giving has also depressed market demand.

However, the impact of China's market downturn on Prada is particularly huge because Prada's fashion characteristics are losing its charm.

According to Chinese media reports, Prada stores will organize discount activities and other high-end businesses.

This is usually avoided, so as not to damage the charm of the brand.

The report said that although the depreciation of the euro has brought the advantage of exchange rate, Prada still has difficulty recovering its vitality after several weak quarters. They admits that the recent situation is also not optimistic.

Donatello Gary, chief financial officer, told analysts: "there will be no marked improvement in the second half of the year.

But our solution is right and we are cutting our spending as far as possible. "

From February to July this year, Prada's net profit was 188 million 600 thousand euros.

Operating income increased by 4% to 1 billion 800 million euros compared with the same period last year, but if the exchange rate was calculated at a constant rate of 5.9%, it can be seen that the impact of exchange rate fluctuations over the same period.

The Asia Pacific region is a key market for all luxury brands, and is the largest market for Prada, accounting for 36% of its global sales, the report said.

According to the current exchange rate, Prada Asia Pacific business income decreased by 1.4% compared to the same period, and at a constant exchange rate, it shrank by 17.5%.

The two drop in sales in Greater China was 1.2% and 19.3% respectively.

Prada said Hongkong and Macao "showed no signs of recovery".

Macao, which is famous for its gambling, was hit by the Chinese government's anti-corruption campaign. Hongkong lost its favor after the protests broke out last year.

Reported that other market performance is relatively good.

In the Americas, for example, the current exchange rate and the constant exchange rate are calculated.

They rose by 13.5% and 6.1% respectively.

European turnover increased by 4.9% at current exchange rates. Prada believes it owes to the resurgence of tourists and European domestic demand.

Some analysts believe that Prada's problem lies in the lack of innovative products.

To overcome this problem, Prada is studying the launch of the new product.

They are also striving to reduce costs and streamline sales and production processes.

Garry said that the company will continue to cut all unnecessary expenses, especially to promote spending, but "do not hurt the brand itself".

Partizio Bertelli, chief executive of Prada, said that at the same time, Prada will slow down the pace of opening new stores starting next year.