Prada shares surge as sales grow amid higher China demand

Prada shares surged Monday amid its earnings results and a positive 2018 outlook.

Prada shares surge as sales grow amid higher China demand

Prada shares moved sharply higher Monday, as the Italian based luxury goods group reported a rise in sales, thanks to strong demand in China. The company said demand improved in the second half of 2017 and it expects that trend to continue during 2018.

Hong Kong listed Prada shares ended the Asian session 14.04% higher at HKD36.95. The stock has been little changed over the past month’s trading period.

Prada reports sales growth

The luxury goods brand’s latest earnings release confirmed that an improvement in sales during the second half of 2017 was enough to help the Italian business achieve higher sales in 2017 than 2016.

The group said total revenues hit €3.1 billion in 2017, boosted by a stronger second half for the luxury goods business. A wider offering in leather goods also proved supportive for Prada.

Sales in Asia Pacific grew 1% in 2017 from a year earlier, fuelled by an 8% increase in China-based sales. US sales rose 4%, while European revenues were “broadly in line with 2016”.

However, the business still has work to do. Sales in Japan slid 11%, while Middle East sales were down 9%.

“I am satisfied with the progress made in 2017: in the second part of the year and in the first months of 2018 sales trends have been progressively improving,” said Prada CEO, Patrizio Bertelli.

“We are starting to see concrete benefits from the numerous strategic initiatives currently under way and we are expecting a return to growth in 2018,” Bertelli said.

Positive 2018 outlook

The luxury goods brand had launched a number of new products in 2017, which appear to be proving popular with customers. By sector, Prada said its ready-to-wear sales rose 7%. However, it said its footwear sales contracted in 2017 from 2016.

However, looking ahead to 2018, the firm’s CEO said it had made a positive start, which it expects to continue throughout the remainder of the year.

“We have seen a promising start to 2018,” Bertelli said. “I am confident this is the beginning of a new phase of development.”

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