Chinese consumers spent less over the last 9 months, meaning Italian fashion brand Prada's profit plummeted a lot in the current fiscal year.
Weak Chinese yuan
Prada's 9-month turnover grew 1.2 % to 2.6 billion euro, but its profit fell 26 % to 235.1 million euro. If only the third quarter is considered, its profit drop is even more spectacular, down 38 %. If exchange rates had remained level in that quarter, turnover would have dropped 10 % to 748 million euro.
A lousy Chinese performance is largely to blame for the weaker results, because the weaker Chinese yuan currency meant that people did not spend as much as before. Only Europe and Japan were growth areas for Prada, with 7.6 % and 4.6 % growth in the previous 9 months and taking into account that exchange rates remained level. American turnover dropped 7.6 %.
CEO Patrizio Bertelli has acknowledged his company will try to lower costs and limit the number of new store openings to 10 in the upcoming year. In 2014, Prada opened 54 stores.