Fashion Brand Prada Shows Declined Growth

Published Date : Apr 01, 2015

The global economy may be soaring, but Gucci, Prada, and LVMH seem to be in crisis with revenues not very encouraging. The revenues for the entire three fashion brand are either declining or flat. The stagnation in the business outcome of the luxury brands is surprise, as both Europe and US are growing decent in economic terms, and China is also showing an annual growth of 7%.

If the economy is good, people are expected to spend on luxury labels such as high priced handbags and other items which they are not. Louis Vuitton, Prada, Gucci, LVMH are hurt owing to this. 

The luxury fashion house from Italy, Prada is hurt the most showing a plunge in profits by 28%, drop in revenue by 1% for the year 2014 which is US$3.8 billion. The company said it knew the results would be bad, the company said China is held responsible for decline in sales by 1%.

On a broader picture, all products and geographies that were driving the growth have become a reason to hurt the company. The scenario was very different three years ago. In 2012, Prada made the proud announcement of its net revenues growth by 29%. The company made a major chunk of its sales through leather goods, retail, and the Asian market excluding Japan.

After a stagnant sales and drop in profit for 2014, Prada said it would undertake a major overhaul for some of the production process, and would also look into cost cutting.