MILAN/HONG KONG (Reuters) - Wealthy tourists and overseas growth helped Italian fashion house Prada (1913.HK) beat quarterly profit forecasts, lifting hopes for holiday sales of its leather bags and colorful dresses despite recession at home.
The Hong Kong-listed company reported on Thursday a 30 percent rise in third-quarter net profit to 122 million euros ($160 million), topping analysts’ average forecast of 110 million, according to Thomson Reuters Starmine.
“The group has continued to grow at a rate that has exceeded our expectations but great care has still been paid to cost control,” Patrizio Bertelli, chief executive, said.
Wealthy tourists from Asia and Russia have shielded the fashion house from sluggish demand in Italy, being felt by domestic peers such as Tod’s (TOD.MI).
Prada, led by trend-setting designer Miuccia Prada and her husband Bertelli, said domestic sales in smaller Italian cities were falling because of the prolonged recession.
“This trend has not changed because the economic situation has not changed and I don’t think it will change in the next few quarters,” chief financial officer Donatello Galli said during a conference call with analysts.
Italian luxury goods makers have pushed back predictions of a rebound early next year because of the economic gloom.
Prada said it was not worried about sales trends during the holiday season.
“I believe and hope in Christmas,” Galli said, adding weekly sales volumes were encouraging. “All in all, we are not worried.”
Galli said he expected sales at stores open over a year to grow by a “mid-teens” percentage in 2012 from the year before, in line with targets, and above the sector average.
Global sales of luxury goods are expected to grow 5 percent this year, stripping out currency effects, from 13 percent last year, according to U.S. consultancy firm Bain.
Milan-based Prade says it still has plenty of room for growth because it has a limited presence in fast-growing markets including Asia and the Americas, compared with rivals such as LVMH (LVMH.PA) and Salvatore Ferragamo (SFER.MI).
Europe has fallen to account for under 40 percent of Prada’s sales so far this year, while Asia contributes over 44 percent. It also aims to expand in the United States.
Prada shares have soared 80 percent so far this year, outperforming the benchmark Hang Seng Index which is up 21 percent over the same period.
Reporting by Farah Master and Antonella Ciancio; Editing by David Holmes and Mark Potter