Negative Growth Into A Luxury Industry Normal

In the past few weeks, many luxury brands and chain corporation have released their current quarter reports. Despite the growth of a few brands, negative growth is the current norm in the luxury goods industry.

Prada, a luxury giant in Italy, has been trapped in the continuously weak China market for two consecutive years.

Prada recently released its full report in fiscal 2015. As of the end of January, the group's net profit was 330 million euros, down 26.6% from a year ago.

Although it has narrowed slightly compared with the 28.2% decline in fiscal year 2014, the net profit of group 2015 in fiscal year has dropped back to five years ago.

Sales revenue was 3 billion 548 million euros, down 0.1% from last year, and 7.7% by fixed exchange rate.

The Asia Pacific market (excluding Japan) produced a net sales of 1 billion 80 million euros, down 4.4% compared to the same period last year. If it was calculated at a fixed exchange rate, it would drop by 16.1%.

In fiscal year 2014, the decrease was 3.1%.

Similar to previous explanations, the Prada group's sales slump is blamed on the deterioration of the Asia Pacific market dominated by greater China.

As the group's most valued market, in the last fiscal year, the Greater China region's annual revenue dropped by 22% to 705 million 800 thousand euros, accounting for 19.9% of the group's revenue. The group said that China's economic situation this year is still unfavourable.

Some analysts believe that the growth of sales in Japan and Europe (excluding Italy)

Net profit fell by less than 27%.

Last year, the European market benefited from the consumption of tourists represented by Chinese tourists. The annual revenue increased by 5% at fixed exchange rates. The annual income of the Japanese market increased by 4% at fixed exchange rates, and the euro increased by 11%.

Prada has been at a disadvantage for a long time. Last year, the brand had saved itself by closing stores and adjusting prices.

Although the group said that the mainland market will improve at the end of the year, analysts believe that Prada must "reshape the brand" to see the hope of recovery.

Luxury brands that share the same fate as Prada are not in the minority.

Tycoon, UK

Burberry said its sales growth in the third quarter was only 1% due to the low consumption of luxury goods in Hongkong and Macao, China.

In the third quarter of December 31, 2015, Boboli retail sales amounted to 603 million pounds ($870 million 900 thousand), an increase of 1% compared to the same period last year, and a decrease of 4%.

Thanks to the recession in the Greater China region and the stagnation of European market growth, Italy luxury George Armani group (Giorgio Armani SpA) grew by only 3.7% in 2015, and its growth rate slowed sharply compared with 16% in 2014.

In 2015, the George Armani group earned a total of 2 billion 640 million euros.