Prada’s Profits Drop by $219 Million, Sales in China Up by 60%
The year 2020 has been a truly challenging year for all kinds of businesses, including the most popular luxury brands. Due to store closures, Prada Group as well as luxury groups LVMH and Kering gained underwhelming financial results and tremendous losses in the first two quarters of 2020.
According to the research data analyzed and gathered by Comprar Acciones, Prada Group swung to a $219 million loss in Q1 and Q2 2020. In comparison, it was able to attain profits of around $190 million in the same period last year.
In order to minimize the company’s losses, around 70% of Prada’s stores were closed. This led to a whopping 71% decrease in total wholesale sales in Q1 and Q2 2020.
When it comes to Prada’s retail sales, all regions were affected. Its sales in the United States fell by 42%. Sales also dropped by 44% in the Middle East, 41% in Europe, while both the Asia Pacific and Japan experienced a 39% decline.
Prada’s Sales in China Up by 60% in Q2 2020
Due to the closure of 70% of its stores, Prada sales in the United States fell by 42%. Sales also dropped by 44% in the Middle East, 41% in Europe, while both the Asia Pacific and Japan experienced a 39% decline.
Other luxury brands such as LVMH and Kering also experienced drastic declines in their retail and wholesale sales. In the first half of 2020, Kering’s revenue collapsed by 29.6%. LVHM, the world’s biggest luxury group, also experienced a dramatic drop. From Q1 to Q3 2020, its total revenue stood at $36.9 billion, down by 21% year-over-year.
On the other hand, its sales in China have sharply recovered since the end of March 2020 when its stores have been reopened for the public.
By the end of Q2 2020, Prada registered a 60% sales growth in China. In July 2020, its sales were up by 66%. Additionally, a massive 44% of the company’s total global sales came from the Asia Pacific region.
Based on a study by American consultancy company Bain & Company, 37% of the total sales in luxury goods worldwide in 2019 came from Chinese shoppers. The bulk of these Chinese customers were travelling abroad at the time of their purchase.