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Prada profit down on China and Europe slump

Prada, the Italian luxury goods company, reported a drop in 2014 net profit on Monday due to weaker sales in China and Europe.

Published: 30 March 2015 11:21 CEST
Prada profit down on China and Europe slump
A Prada shop in Shenzhen, China. Photo: Prada photo: Shutterstock

The company, whose brands include Miu Miu and Church's, said net profit for last year dropped 28 percent to €450.7 million as sales overall fell one percent.

It is the first drop in annual profit that the company has reported since listing on the Hong Kong Stock Exchange in 2011.

Sales in Europe fell by 1.1 percent compared to 2013 due to a decrease in the number of tourists to the continent and weak domestic demand, the Milan-based company said in a statement.

The situation in the Asia Pacific region was more challenging, with sales falling 5.5 percent, mainly due to weak performance in Hong Kong and Macau, where “market conditions deteriorated significantly in the second half of the year”, the company said.

The different timing of the Chinese New Year also affected sales in the greater China area in January, the company added.

But the Japanese market continues to thrive, with sales growing 7.7 percent, as well as the Middle East, where sales were up 9.9 percent.
 

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EUROPE

Brussels warns Italy to rein in public spending amid pandemic

Most EU member states should continue to invest to support the continent's economic recovery, but heavily-indebted Italy should rein in public spending, the European Commission warned on Wednesday.

Published: 24 November 2021 16:07 CET
Italian Prime Minister Mario Draghi
Italian Prime Minister Mario Draghi expects the country's GDP to recover in the coming year. Photo: Alessandra Tarantino / POOL / AFP

“The economy is bouncing back from the recession, driven by a rebound in demand across Europe,” EU executive vice-president Valdis Dombrovskis said.

“But we are not out of the woods yet. The economic outlook remains riddled with uncertainty,” he said, warning that the coronavirus is still spreading, prices are rising and supply chains face disruption.

Despite these unpredictable threats, European officials predict a strong recovery, and want eurozone governments to maintain their “moderately supportive fiscal stance” to support investment.

EXPLAINED: How Italy’s proposed new budget could affect you

Italy, however, remains a worry. Its public debt passed 155 percent of its GDP last year, and Brussels is worried that it is still budgeting to spend too much next year.

“In order to contribute to the pursuit of a prudent fiscal policy, the Commission invites Italy to take the necessary measures within the national budgetary process to limit the growth of nationally financed current expenditure,” the commission report said.

The commission did not say by how much Italy’s spending plans should be reduced, and its recommendation is not binding on the government.

The European Union suspended its fiscal discipline rules last year, allowing eurozone members to boost their public spending to help their economies survive the Covid-19 pandemic.

But the European commissioner for the economy, former Italian prime minister Paolo Gentiloni, said governments should now “gradually pivot fiscal measures towards investments”.

“Policies should be differentiated across the euro area to take into account the state of the recovery and fiscal sustainability,” he said.

“Reducing debt in a growth-friendly manner is not necessarily an oxymoron.”

Italian Prime Minister Mario Draghi, a former European Central Bank chief, has said Italy’s economy is recovering after the pandemic-induced recession.

Draghi forecast economic growth this year of “probably well over six percent” in a statement on October 28th.

Italy’s GDP rate grew by 2.6% in the third quarter of 2021.

While economists don’t expect Italian GDP to bounce back to pre-pandemic levels until 2022, ratings agency Standard & Poor has revised its outlook for Italian debt from stable to positive.

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