Prada boosted by higher demand in Asia and tourists

Hong Kong: Prada SpA, the Italian fashion company that owns the Miu Miu and Church’s brands, reported first half sales that rose 37 per cent and beat analyst estimates amid higher demand from Asian shoppers.

Sales increased 37 per cent to 1.55 billion euros (Dh7.05 billion) in the six months ended July 31 from 1.13 billion euros in the year-earlier period, the company said in a statement on Monday. The average of five analysts’ estimates compiled by Bloomberg was 1.5 billion euros of sales.

Chief Executive Officer Patrizio Bertelli is counting on the strength of Prada’s brand to overcome Europe’s sovereign- debt crisis and slowing economic growth in China. The company has lower store penetration compared with its competitors, giving it a lot of potential to expand, according to Candy Huang, an analyst at Barclays Plc in Hong Kong.

“Prada remains our preferred name given its pricing power, strong branding and product initiatives,” Huang, who recommends buying the shares, wrote in a note to clients before the announcement. “While selected luxury goods reported mild slowdown in certain regions during the last quarter, Prada has not noticed any material slowdown globally.”

Sales have been helped by tourists, who accounted for 50 per cent or more of what it sold in Europe and the US, Huang said. Asia, excluding Japan, is estimated to have contributed as much as 60 per cent of the total sales, mostly from Greater China, Huang said.

Shares of Prada rose 2.48 per cent to HK$53.65 at the close of Hong Kong trading. The benchmark Hang Seng Index advanced 1.69 per cent.

The company said its directly operated stores recorded a like-for-like sales growth of 19 per cent, according to the statement. Prada’s revenue increased 31 per cent in the Americas, 37 per cent in Europe and 45 per cent in Asia Pacific ex-Japan during the period.