Despite launching widespread effort to remedy consistently falling sales for its namesake brand, Prada SpA reported on Wednesday that it experienced a 15.9 percent fall in annual profit - the lowest since 2011. In the fiscal year ending on January 31, Prada reported net income of 278.3 million euros ($295.03 million), down from 330.9 million euros a year earlier. In February, the Italian group said saw its sales accelerating in the past months, particularly in Greater China and Russia, pointing to an improving outlook after sales slumped last year.
This time last year, the struggling Italian brand announced that it would introduce more lower-priced handbags and double its online business in an attempt to reverse two years of stagnant sales. The Milan-based company further held that it would close stores and narrow the spread on prices of new products between regions to about 10 percent.
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.
Early this year, Miuccia Prada’s brand publicized plans to vastly alter its traditional advertising strategy to comprise what it called a “continuous visual data stream.” Per 10 Magazine, the new tactic, entitled, Prada365, 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.
As for the products, themselves, “We are working deeply to really fill all the price ranges,” Prada’s Strategic Marketing Director Stefano Cantino said last year of Prada’s plans to introduce more bags costing between 1,200 euros ($1,370) and 1,400 euros. “There is strong demand for newness.”
Still yet, Prada is in the process of doubling its e-commerce sales by increasing the number of categories it offers online, particularly shoes, and expanding its social media activities. The brand still does not plan to sell clothing over the Internet, preferring instead to direct consumers to the company’s 618 stores.
Of the most recent fiscal report, Prada's said chief executive officer Patrizio Bertelli told WWD: “The Prada group has delivered a satisfactory set of results in-line with market expectations for 2016, a challenging year of transition for the company. Our offer has been enriched with products that stand out for their innovative style and quality, while at the same time we have also streamlined and rationalised the cost structure across all business lines."