Italian luxury goods maker Prada SpA reported a 37.6 percent fall in quarterly profit on Tuesday, due to a slowdown in the Asia Pacific region, particularly in Hong Kong, as cash-rich Chinese tourists flock to new shopping destinations. Mainland Chinese tourists have increasingly turned their backs on Hong Kong as a drop in the yuan currency against the Hong Kong dollar makes goods more expensive in the city, and visitors seek out new places such as Japan and South Korea. "The devaluation of the renminbi recorded between August and September had a negative impact on the purchases made by the Chinese travellers," the company said in a statement.
Net income fell to 46.48 million euros ($51.12 million) for the three months ended Oct. 31, from 74.47 million euros a year earlier, and 129.8 million euros in the second-quarter. That was lower than an analyst forecast of 77.83 million euros, according to Thomson Reuters SmartEstimate. Net revenue fell 5.3 percent, while sales of higher-margin leather goods dropped 11.6 percent.
Beijing's clamp down on corruption and conspicuous spending since 2012 has hurt the luxury market and prompted more Chinese to buy high-end goods abroad to save money and shop anonymously. Analysts estimate more than two thirds of luxury purchases by Chinese buyers is made overseas.
High rents have also hurt companies in Hong Kong, where Coach Inc closed one of its three shores this year amid sluggish demand and other luxury goods retailers have put expansion plans on hold.
The value of Hong Kong retail sales fell for an eighth consecutive month in October.
(Reporting by Donny Kwok and Meg Shen; Editing by Louise Heavens)