MILAN (Reuters) - Revenue at Italian fashion group Prada (1913.HK) rose 2% in the first half of the year, in line with market expectations, as improving full-price sales and a solid growth in its wholesale channel offset the impact of a move to cut back on markdowns.
The Milan-based company said this year it would stop offering end-of-season promotions in its stores and be more selective with wholesalers to support full-price sales to lift margins and protect its brands.
Prada sales had risen in 2018 for the first time in four years helped by a new strategy aimed at rejuvenating the brand which focused on renovating shops, new products and digital sales.
In the first half of 2019, revenue totalled 1.57 billion euros (£1.43 billion), which was flat when stripping out the impact of currency swings.
The retail network declined 3% affected by the phase-out of markdown sales, while the wholesale channel rose 14% driven by online sales, with the rationalisation not having any impact yet on that part of the business.
Prada warned however it will affect results in the short-term.
Operating profit, or earnings before interest and taxes (EBIT), decreased 13% to 150 million euros, equivalent to 9.6% of sales. The group’s operating profit margin has been declining every year since 2012 when it stood at 27%.
Analysts had expected revenues of 1.57 billion euros and an operating profit of 152 million euros, according to Refinitiv data.
Prada shares closed down 0.8% in Hong Kong before the results’ publication.
Reporting by Claudia Cristoferi; Editing by Keith Weir