Italian luxury brand Prada experienced a 9% drop in sales last year, making it the lowest annual profit since 2011.
The luxury market has had a bumpy year, resulting with many designer houses struggling – especially Prada. The designer house has had an issue being particularly aggressive with store expanding, yet at the same time been very slow when it comes to expanding digitally, but their main battle has been the exposure to China. Prada is one of the most popular luxury brands in China and a large demand is expected from the nation, yet 2016 represented low sales, not only in China but also from European tourism.
Prada is doing everything they can to improve their performance. They are planning a steady number of outlets, improving their social media appearance and hoping to increase online shopping by expanding and offering more categories such as shoes. Their presence in China is progressing. Chief executive of Prada states;
‘We implemented a profound phase of business process rationalisation and identified important strategies to secure the group’s future growth. This included revising our digital strategy with the creation of a highly skilled team with professional experience from the digital technology and new media industries. In the meantime, we are strengthening the retail management structure with the aim of integrating online channels with with traditional channels in a truly innovative dimension.’
The brand’s annual sales ended on €278,3 million last year. They’ve spent 10% less on operating the digital this January, which helped increase the cash flow with 72% ending on €632 millions. Over the last year, the company’s Hong Kong shares are up 32%. Even though Prada are far from fully recovered, they are heading in the right direction.
Read about how Instagram is shaping Millennial’s lives HERE.
Text: Christine Rye-Johnson
Images: Vogue, Business of Fashion