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HONG KONG, June 6 Shares of Prada SpA
fell more than 6 percent to a two-year-low on Friday after the
Italian fashion house surprised investors with a drop in
quarterly sales, sparking concern that the brand could be
falling out of favour in key Asian markets.
Shares of the company fell as low HK$53.70, down more than 6
percent, lagging a 0.3 percent dip for the benchmark Hang Seng
On Thursday, Prada signalled a possible cut to full-year
guidance after first-quarter sales fell in its main European and
Asian markets and revenue growth for its signature brand almost
ground to a halt.
Its performance in the three months to April 30 had been hit
by unfavourable exchange rates, declining wholesale deliveries
and a tough comparison with the previous year. With sales in
Prada's home country of Italy and other European markets still
sluggish, the company depends on Asian consumers for growth.
"The market was expecting slower growth in sales, not an
actual decline," said Steve Chow, an analyst at Sunwah Kingsway
Research. "The negative (revenue) growth triggered concern over
whether the brand has lost its appeal, especially when other
luxury brands are doing well despite a relatively weak luxury
In May, British luxury brand Burberry posted
forecast-matching results, with an 8 percent rise in annual
profit, though it reiterated that if foreign exchange rates
remain at current levels there will be a material impact on its
In April, the world's biggest luxury group LVMH
posted much higher than expected fashion and leather sales,
boosted by a strong start for the year for its flagship Louis
Vuitton brand, with sales to Chinese and European customers
improving during in the first quarter.
"Other companies are reconfiguring their products. LV and
Gucci are moving away from logo-heavy products ... Prada is
still taking market share overall but some of the other brands
are catching up with better products," said Aaron Fischer, head
of consumer and gaming research at CLSA.
Fischer added that menswear is a big opportunity for Prada,
which he says has a more credible mens brand than its rivals.
(Reporting by Donny Kwok and Clare Baldwin; Editing Miral