Prada reported a 10 percent drop in revenues on Monday as sales fell across all regions, including Japan – where it previously maintained five years of consecutive growth – and its top market, Asia Pacific. Consolidated revenues in the financial year through January 2017 fell to 3.18 billion euros ($3.4 billion), down from 3.55 billion euros a year before.
The brand has continued to struggle following years of overexpansion in retail and high exposure to Asia. While all luxury-goods companies have been hurt by collapsing demand in China, the strong dollar and the terrorist attacks in Europe, the Italian company has been hit harder than most, at least in part because its handbag range is too expensive for most and it has been too slow to invest online.
The Italian company has responded by dialing back store openings and slashing costs, and pledged to increase prices in Europe. The house further plans to double its e-commerce sales over the next two years by increasing the number of categories it offers online, particularly shoes, and expanding its social media activities. Prada doesn’t plan to sell clothing over the Internet, preferring instead to direct consumers to the company’s 618 stores.
"This past year we implemented a profound phase of business process rationalization, still underway, and identified important strategies to secure the Group's future growth," said chief Executive Patrizio Bertelli in the statement. This includes a drastically revamped advertising strategy, opting for a “continuous visual data stream.”
Entitled, Prada365, the brand’s new ad initiative will “encompass print, online and social media, rejecting the idea of a singular campaign each season.” The new ad initiative will be less structured, more spontaneous, a collaboration of sorts featuring the work of an array of different concepts, settings, models, and photographers with a renewed focus on the brand's actual products themselves.
Not all is lost, though. Prada said sales had accelerated in the past two months, particularly in Greater China and Russia, pointing to an improving outlook after its revenues slumped last year. The Italian group, which has said it expects to return to profit growth this year after being hit by the downturn in global luxury spending, said "positive progress in sales trend were seen in the second half of the year, particularly in December 2016 and January 2017."