HONG KONG/MILAN (Reuters) - Italian luxury goods group Prada (HK:1913) reported nearly unchanged full-year sales on Wednesday, hit by weakness in Greater China where economic growth is softening and consumers have been shunning extravagant purchases.
The Milanese fashion house said net revenue totalled 3.55 billion euros ($4 billion) in the year to Jan. 31. Sales in Asia Pacific fell 16 percent at constant exchange rates, and even including a boost from currency effects, revenue in the region dropped 4 percent.
Prada, best known for handbags retailing for as much as 6,000 euros, has seen earnings slump in recent quarters, hurt by a lack of new models along with costly investments in new shops in the face of softening demand for luxury goods.
China's clampdown on corruption and its sharp economic slowdown have clouded the outlook for luxury brands, while global political and security tensions have impacted tourism in some markets and added to the pain.
Some customers have also opted for more affordable labels such as Furla, Longchamp and Kate Spade (N:KATE) in the United States.
"The economic situation of the Chinese market remains negative although there was some improvement in the final quarter," the group said in a statement.
The strength of the dollar lifted the value of sales in North America, but affected tourist flows, so at constant currencies revenue there fell 9 percent. Sales rose both in Europe and Japan.
"These numbers are not a surprise considering the challenging macro and geopolitical environment, yet are likely to continue to raise questions on Prada brand's repositioning exercise and the timing of any potential success," analysts at Citi said in a note.
Prada has said it wants to cover all price ranges with new handbag models, including some starting at 700 and 800 euros.
Sales from Prada's 618 directly owned shops rose slightly to 3.06 billion euros while wholesale revenue eased.
CEO Patrizio Bertelli said strict cost control would help Prada consolidate its position while it launches initiatives including what he called "an extensive digital project to strengthen dialogue with our customers".
Prada shares have slumped 44 percent over the past year, underperforming the benchmark Hang Seng Index (HSI) which has fallen 19 percent.
Sales of Prada's more youthful Miu Miu brand rose slightly, while Church's, the British shoe brand Prada acquired in 1999, achieved robust growth. Sales of the Prada brand rose 1 percent only thanks to exchange rates.
(($1 = 0.8988 euros)