Prada Profits Plunge 30% Big Strategy Mutation

Recently, Italy luxury goods giant Prada released its annual performance as of January 31, 2015: net income (Sales) decreased by 1% compared to the same period last year, and net income (profit) fell by 28.2% over the same period.

Shortly after Lenovo's recent sharp decline in Chanel in China, it can't help feeling that the luxury industry is not too short this winter.

In the past year, Prada posted a net profit of 3 billion 550 million euros, down 1% from the same period last year. In addition to the exchange rate, the decline also included sales of retail channels and sales of wholesale channels by 3.4%, according to the announcement.

The announcement said that the persistent economic uncertainties and political and social tensions had an impact on many important markets: Japan and the Americas increased, while Europe, Italy and the Asia Pacific region were declining, such as the European region dropped by 4.9%, and the Asia Pacific region dropped by 3.1%.

Due to poor performance in the Greater China and European markets, Prada's net income last year was 450 million 700 thousand euros, down from 627 million 800 thousand euros in the previous year, a sharp decline of 28.2% over the same period last year.

Basic earnings per share were 0.176 euros.

The final dividend is 11 euro cents.

The company said that in the second half of last year, the business situation in Hongkong and Macao declined significantly, and the overall performance of the company was lowered.

Last year, the number of visitors to the mainland dropped sharply.

At the same time, operating expenses are rising.

During the reporting period, Prada's operating expenses amounted to 1 billion 850 million euros, up 8% from 1 billion 710 million euros in the same period last year.

Prada is not alone. Compared with the former luxury group, the group's operating profit dropped by 5% last year, and LVHM group's core profit fell for the first time in five years.

However, the decline in Prada's profits is still large.

Zhou Ting, President of the Institute of wealth research, told reporters that the overall environment of the luxury goods industry is worrying, and the rise in operating costs is rigid, which makes most luxury companies' profits decline.

"But Prada's

Such a decline is also rare in the industry, which shows that there are some problems in the operation of enterprises. "

In fact,

The sharp drop in performance reflects only one aspect of the industry's status quo.

Another exploding industry news was Chanel's price cut in China.

In March 17th,

Since April 8th, we have decided to coordinate the price gap among different markets in the world. The first thing to adjust is the classic and BoyCHANEL handbags.

The next day when the news was released, Chanel stores in China quickly adjusted prices, which caused consumers to queue up to buy.

This week Ting said that Chanel's move is also an inevitable choice for the company. One of the reasons for price reduction is bound to pull performance.

Originally, for luxury goods companies, the price increase from one to two times a year has become the norm.

Now, things are changing.

In fact, in view of China's market price reduction, it is not the Chanel family that wants to lower the global spread.

Before and after the Basel Swiss watch exhibition held in March 19th, Patek Philippe and Heuer Watch Brands announced the price adjustment strategy in succession. As early as the beginning of last year, Yu had implemented the strategy of "Hongkong mainland's parity".

Zhou Ting told reporters that in the luxury industry, traditional enterprises are really having a bad time.

According to the information provided, the total capacity of the global luxury market reached a record $232 billion in 2014, and the annual growth rate is expected to reach 7%.

But the main driving force of growth is the rapid development of high-end niche brands, especially the customized brands.

For the traditional luxury brands, the relative market share is declining.

She said Prada's embarrassment is unlikely to change in a short time.