Patrizio Bertelli spoke on (24 May 2012) in Hong Kong with Bloomberg Television's Robyn Meredith on Expansion Plan, Pricing and his opinion on counterfeit fashion.
Along with going into details about Adding 260 Shops in 3 Years on Demand From BRICs he remains confident about the Italian fashion house's growth prospects despite fears of a slowdown in demand for luxury goods, as the company posted a 59% rise in first-half net profit.
"We are aware of the negative market trend but, counting on the strength of our brands and our ability to pursue our objectives, we look forward with confidence to the near future without altering our strategy based on achieving our long-term growth targets," Mr. Bertelli said.
“We aim to speed up expansion by opening 100 stores this year, 80 stores each in 2013 and 2014 globally,” said Chief Executive Officer Patrizio Bertelli whose company opened 75 stores last year.
Demand for Prada leather goods and other items is rising even as China’s economic growth slows and Europe’s debt crisis weighs on consumer spending, Bertelli said. The company is benefiting from increasingly wealthy Chinese tourists who are fueling growth in Europe as it also targets markets in the Middle East, he said.
“We are expanding in Morocco, Istanbul, Beirut, Dubai and Qatar,” Bertelli said in an interview with Bloomberg Television conducted in Italian via a translator. “Brazil is also a big market we’re looking at.”
The expansion would increase the number of Prada outlets to 674 by adding to the 388 directly operated stores and 26 franchises it had as of January.
The so-called BRICs take their name from the emerging economies of Brazil, Russia, India and China.
The 66-year-old chief executive also said the company plans to ramp up the presence of the Miu Miu designer wife Miuccia's brand, as it is “under-penetrated” in many countries.
Prada net profit totalled €286.4 million ($371.8 million) for the six months ended June 30, compared with €179.5 million a year earlier. Strong sales in the Asian-Pacific region contributed to the gain.
SHRUGGING OFF FEARS OF A LUXURY SLOWDOWN
Mr. Bertelli minimized concerns about the slowdown of the Chinese economy as a factor affecting Prada's revenues. "We all need to be less hysterical" about China's slowdown, he said speaking to analysts, because the limited decrease in growth recorded so far isn't so significant that it will affect the Italian fashion house's sales. "We're in a global world and we should not focus only on China," Mr. Bertelli said.
About the slowdown of the Chinese economy as a factor affecting Prada's revenues. "We all need to be less hysterical" about China's slowdown, he said speaking to analysts, because the limited decrease in growth recorded so far isn't so significant that it will affect the Italian fashion house's sales. "We're in a global world and we should not focus only on China," Mr. Bertelli said.
Prada's chief executive added that consumers in China are evolving and "need to be stimulated to spend."
In the past few months, the market has started preparing for a slowdown in growth in the luxury industry amid weakening demand in the sector's important Chinese market and an increasingly difficult economic situation in Europe.
But business in the Asian-Pacific region remained strong for Prada in the first half, with revenue increasing 45% compared with a year earlier. In Europe, revenue climbed 37%, supported by purchases by tourists from emerging markets.
Particularly, Prada recorded an increasing presence in Europe of tourists from Russia, India and Brazil as well as from Asia, Mr. Bertelli said.
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| Patrizio Bertelli |
Prada joins other luxury brands minimising concerns about a Chinese slowdown. Last month France's Hermès International RMS.FR -0.72%SCA said that it would raise its growth target after sales of its Birkin bags, silk scarves and other products in China climbed 25% in the company's second quarter from a year earlier.
Prada's overall first-half revenue increased 37% to €1.55 billion.
In a conference call with analysts, Mr. Bertelli also said that he expects good double-digit growth" at the end of the year compared with the previous year's result, although "we need to be cautious" considering the current economic climate. He said a price increase to cover fluctuations in exchange rates could be considered, but no other price intervention is planned.
SHRUGGING OFF FEARS OF COUNTERFEIT GOODS
While EBay Inc. (EBAY) was fined by France’s high appeals court for sales of counterfeit LVMH Moet Hennessy Louis Vuitton SA (MC) goods on its website, Bertelli shrugged off concerns that fake goods could hurt the company’s sales in markets such as China.
“Fake goods aren’t totally bad, at least it created jobs at some counterfeit factories,” said Bertelli. “We don’t want to be a brand that nobody wants to copy.”
For authentic luxury products & services visit http://www.luxuryonlinestore.net
To contact the reporter on this story: Vinicy Chan in Hong Kong
To contact the editor responsible for this story: Frank Longid
Additional Content thanks also The Wall Street Journal
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