Once the major driver of sales growth, China and Hong Kong now pose the biggest drag on profits at Prada SpA, causing the company’s share price to drop by almost 50 percent over the last year.
Prada’s net profit fell by 25 percent in the first half due to slumping sales in China and Hong Kong. Local media in China also reported that Prada was discounting at its stores, a practice that is typically avoided by high-end luxury brands to avoid tarnishing its brand image.
According to CFO, Donatello Galli, the company expects to cut expenses and slow store openings. At the same time however, the company is working on a new line of handbags which it hopes to attract growth and higher margins.