Prada stocks drop on profits warning

Prada has issued a profits warning following a fall in European sales.


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By :  ,  Financial Analyst

Luxury fashion retailer Prada saw its share price fall badly yesterday (April 2nd) after the company issued a profits warning.

Prada explained profits are likely to be lower than initially anticipated as a result of falling sales in Europe, with stocks down by as much as eight per cent at one point, its biggest daily drop in the last two years, reports BBC News.

Prada reported profits of 627.8 million euros (£519 million) for the year ending on January 31st, while same-store sales were predicted to rise at a "low single-digit" pace in 2014.

The company added currency fluctuations are among the reasons why profits have been affected at the brand, but it is likely the recession has also tightened purse-strings for customers. Many luxury brands have found their businesses have been relatively unaffected by the global financial crash, however.

Prada chief executive Patrizio Bertelli said in a statement: "The continuing strength of the euro does not help with exports. We are confident that the luxury goods sector will continue to grow and that, faced with rapidly changing consumer tastes and preferences, we will draw on our creativity and innovative capacity which enables us to interpret and, often, anticipate market trends."

Shares slip

Although shares in the fashion house were down by eight per cent at one point on the Frankfurt Stock Exchange, they later recovered and closed for the session just 6.47 per cent down.

Prada insisted 2013 saw the company successfully expand into the luxury goods market around the world. It said: "By combining quality, stylistic innovation, excellent customer service and a retail presence in the most prestigious international locations, for the fourth consecutive year, the group achieved a high rate of growth and operating profit among the highest in the sector."

The company also stated that its brands achieved "excellent" results with 11.1 per cent revenue growth – which it pointed out would be 15.6 per cent at constant exchange rates – "where the brand recorded one of the highest rates of growth in the sector: 19.6 per cent at constant exchange rates".

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