Prada’s Mainland Sales ‘Healthy’ While Hong Kong Slumps

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Italian luxury label Prada has continued to feel the effects of China’s luxury slowdown for the first quarter of 2014, but this time, the company says it’s not mainland China causing the biggest slump.

Prada’s financial report released today revealed that its Asia-Pacific retail growth slowed to 3.9 percent for the quarter, due in part to an “unfavorable” Chinese New Year calendar, but the company states that China and Macau “continue to show healthy rates of growth.” Hong Kong, however, was blamed for slowing numbers after logging softer sales during the quarter. Greater China made up 29 percent of the company’s total global sales for the quarter, a percentage that has dipped slightly from 30 percent in 2013.

Mainland Chinese consumers have long flocked to Hong Kong to snap up cheaper luxury goods, but Hong Kong retail sales saw their biggest drop in five years recently as mainland visitor numbers have fallen. As China’s anti-corruption campaign has continued to affect luxury on the mainland, Hong Kong previously stood out as a bright spot for many brands. This all appears to be changing now that Hong Kong lawmakers are currently embroiled in a controversial debate about limiting the number of mainland visitors after anti-mainland sentiment surged over the past few months.

Meanwhile, as Chinese tourists head to Japan to take advantage of the weaker yen, Japan did “extremely well” for the first quarter with 30.5 percent growth. The company’s Greater China net sales growth for 2013 stood at 12.3 percent.

Despite China’s luxury slowdown, Prada is still forging ahead with its China expansion this year, with opened new store locations in Chengdu, Chongqing, Beijing, and Xi’an. As Chinese consumers develop a taste for niche brands, the company’s smaller label Miu Miu reported “double-digit” Asia-Pacific growth for the first quarter and has opened new stores in Chongqing and Xi’an in 2014. Reuters reported yesterday that Prada is also focusing on menswear in China as a way to find a new source of revenue with more dedicated menswear shops.

 

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